- European Union’s MiCAR regulation identifies EMTs and ARTs as suitable for payment use.
- Bank of Italy prioritizes stablecoins linked to official currencies (EMTs).
- Governor Panetta advocates for gradual easing of monetary policy.
The Bank of Italy is preparing guidelines to align with the European Union’s upcoming regulations for crypto assets, as reported by Reuters. Governor Fabio Panetta made the announcement during the Italian Banking Association (ABI) meeting, emphasizing the goal of safeguarding the stability of the payment system.
Panetta highlighted that the EU’s Market in Crypto Asset Regulation (MiCAR) identifies electronic money tokens (EMTs) and asset-referenced tokens (ARTs) as suitable for payment use. EMTs are linked to the value of a specific official currency, while ARTs derive their value from one or more underlying assets. Panetta stated:
Our assessment is that the only instruments that can serve as means of payment while fully preserving the public’s trust are EMTs, electronic money tokens, which banks or electronic money institutions can issue.
This underscores the central bank’s preference for EMTs over ARTs in maintaining public trust in payment systems.
Panetta also addressed concerns over persistent services inflation and strong wage growth. Speaking at the annual meeting of the Italian Banking Association in Rome, he remarked that these concerns are not unfounded but need to be put into perspective, as services prices tend to behave differently from those of goods.
Panetta reiterated that recent data supports a gradual reduction in borrowing costs. Despite eurozone inflation easing to 2.5% in June, the services sector’s inflation remained steady at 4.1%. This has made some European Central Bank (ECB) officials cautious about committing to further rate cuts.
ECB President Christine Lagarde recently mentioned that high service price growth could be counterbalanced by other factors, suggesting a nuanced approach. Yannis Stournaras of Greece echoed this sentiment, advising against over-interpreting the services inflation figures.
Addressing wage growth concerns, Panetta remarked that a thorough analysis could alleviate fears. He emphasized that past interest rate hikes are still squeezing demand, production, and inflation, and will continue to do so in the coming months.
According to central bank projections, the impact of monetary tightening on prices will intensify in 2024. Panetta concluded that the fall in inflation has made it possible to start easing monetary conditions.
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