Banks & Crypto Risks: What Italy's Central Bank is Saying

So, the head honcho of Italy's central bank, Fabio Panetta, who also helps make decisions for the European Central Bank, was saying on Friday that banks really need to watch out when they mess around with crypto stuff. He thinks there's a big risk it could make people lose trust in regular banks if things go wrong and people lose money.

He brought this up during the Bank of Italy's yearly report. He's kinda worried about how crypto and regular money systems are getting closer. Like, more and more banks are making deals with these crypto companies.

Panetta mentioned that folks who hold crypto might not really get what they are. They might think it's like having money in a normal bank account. And if they lose cash on crypto, it could make them lose faith in the whole banking system. That would be a bummer, right?

Remember how Italy's biggest bank, Intesa Sanpaolo, did that "test run" back in January? Their CEO, Carlo Messina, called it that. They actually bought 1 million euros worth of bitcoin! Bitcoin is like, the most famous digital money out there.

Intesa actually set up a whole desk just for trading digital money back in 2023. And last year, they even started doing those instant trades with crypto.

And get this, Bloomberg reported on Thursday that Spain's Santander bank is also thinking about getting more into digital money. This includes maybe offering something called a stablecoin and letting regular folks who use their digital bank get into cryptocurrencies. Interesting, huh?

Panetta also talked about stablecoins. These are supposed to stay at a steady price by being linked to regular money or other things. He's concerned that if big tech companies from other countries push these stablecoins hard, they could mess with how we usually pay for stuff. He basically said that if there aren't good rules for them, it's kinda questionable if they're even good to use for paying for things. Idk, maybe he has a point.

But, he also warned that it would be pretty dumb to think we can just stop crypto, including stablecoins, from spreading by just putting rules on them. He thinks we need a response that keeps up with all the new technology happening. He even said that's exactly why they're working on this "digital euro project."

The European Central Bank is working on creating its own digital money. They want it to be able to compete with all the private digital money options out there that could, like, take away from the importance of the central bank's money. It's a lot to keep up with, tbh.