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Europe’s monetary system is moving toward a digital future while keeping its traditional structure intact, according to senior European Central Bank officials speaking this week. Central bank and commercial bank money will remain the foundation of the system, even as digital assets, stablecoins, and tokenized finance expand across Europe.
The message came from Fabio Panetta, who said digitalization will reshape money without dismantling the two-tier structure linking central banks and private lenders. He told Italy’s banking association that both central bank money and commercial bank money will become fully digital over time while continuing to anchor monetary stability.
Panetta said the rise of tokenised assets has raised questions about the future of Europe’s monetary structure, yet the core system will endure. Some analysts warn that stablecoins could weaken the principle that all money trades at equal value regardless of issuer.
Still, Panetta noted traditional money remains the only stable anchor of the financial system despite rapid innovation. He further added that commercial bank money will evolve alongside central bank money as digital forms become standard across payments and finance.
Stablecoins will likely grow in use, though Panetta mentioned they will not replace established money issued by central banks and regulated banks. “They’ll definitely develop,” Panetta said, citing strong support from the U.S. administration to boost dollar demand through digital assets.
To keep central bank money relevant, the European Central Bank plans to launch a digital euro in 2029. The project aims to protect Europe’s monetary sovereignty as digital payments and blockchain-based assets spread.
Panetta said commercial bank money will also become mostly tokenized, meaning assets convert into digital tokens on distributed ledgers like blockchain. Banks in several countries, especially Germany, have opposed the digital euro over fears of losing payment market share.
Panetta responded by warning banks to focus on control over payments rather than lost revenue from digital transactions. As a former ECB executive board member, he previously led the digital euro initiative before becoming Italy’s central bank governor.
According to Panetta’s statements, recent geopolitical tensions show risks in Europe relying on U.S. firms for most digital payments. He pointed to companies such as Visa, Mastercard, and PayPal, which handle over two-thirds of European payments.
“When I discussed this with banks that opposed the digital euro, I asked who controls the 70% already lost,” Panetta said. European authorities plan strict regulation of stablecoins and private digital assets to avoid monetary fragmentation.
Unlike private digital currencies, the digital euro will integrate directly into the ECB’s monetary policy framework. This design aims to maintain trust, ensure interchangeability of money, and prevent instability from unregulated innovation.
As digital finance expands, Europe believes issuing central bank digital money remains critical to safeguarding control over money creation and use. Can a regulated digital euro ensure stability as private digital assets keep growing?
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Europe is moving toward a digital future without dismantling its monetary framework. The ECB plans a digital euro while keeping central and commercial bank money at the system’s core. At the same time, regulators aim to control stablecoins and tokenised assets to protect monetary sovereignty and payment stability.
