The design of digital money has consumed central bankers' attention for nearly a decade, but Bank for International Settlements forums and academic workshops increasingly reveal an uncomfortable truth: the technological specifications matter far less than the institutional architecture that underpins them. Chiara Scotti, Deputy Governor of the Bank of Italy, articulated this reorientation at a Rome workshop in early May, signaling a fundamental shift in how regulators approach the intersection of digital assets and monetary transmission. The debate is no longer primarily about whether distributed ledgers work—they do—but rather who controls the infrastructure, how trust is established, and what happens to monetary policy effectiveness when money itself becomes programmable.
The framing matters immensely. A decade ago, central bank digital currency (CBDC) discussions orbited around technical feasibility: could blockchain infrastructure handle settlement velocity? Could privacy be preserved without compromising regulatory oversight? These remain valid engineering questions. But the Rome workshop, convened jointly by the Bank of Italy, the European Central Bank, and academic research networks, pivoted toward a harder problem: how does the introduction of digital money alter the transmission mechanisms through which monetary policy influences real economic behavior? And critically, what institutional relationships must be preserved or rebuilt to maintain central bank authority in that transmission chain?
This pivot reflects a maturing regulatory understanding. When commercial banks intermediated all money flows, central banks controlled the system through reserve requirements, discount rates, and open-market operations—levers that worked because banks had no realistic alternative to the central bank's balance sheet. Digital money architectures threaten that monopoly. If a CBDC is distributed across multiple nodes, if private stablecoins compete with official digital currencies, if cross-border settlement happens through cryptocurrency networks rather than SWIFT rails, the central bank's position weakens. Monetary policy transmission becomes an open question. How do you conduct expansionary policy if citizens hold digital currency directly at the central bank and bypass commercial banks entirely? How do you manage systemic risk if non-bank entities issue competing digital assets with network effects that rival official money?
Scotti's emphasis on the "architecture of trust" addresses these anxieties head-on. Trust, in this context, does not mean confidence in a blockchain's cryptographic security—that is merely table stakes. Rather, it means the institutional confidence that the entity controlling the money supply will use that power prudently, that rules will not change retroactively, that redemption rights are guaranteed, and that the system will not be weaponized for political ends. These assurances cannot be encoded in smart contracts. They depend on central bank independence, transparent governance frameworks, and the acceptance by market participants that regulatory authority is legitimate and bounded by law.
The eurozone context sharpens this problem considerably. The ECB operates across 20 national economies with different legal traditions, political constraints, and fiscal positions. A digital euro, if badly designed, could accelerate capital flight from weaker sovereigns during crises. Alternatively, if architected to require ECB-approved intermediaries (banks, payment service providers), it preserves the transmission mechanism but also concentrates institutional power in ways that invite political challenge. The workshop's focus on monetary policy transmission was therefore not academic: it was a working group tackling the question of how the eurozone's monetary union survives the digitalization of money itself.
What distinguishes this moment from earlier CBDC debates is the concurrent rise of unregulated digital assets. Five years ago, cryptocurrencies were largely dismissed as speculative vehicles for retail gamblers. Today, stablecoins backed by pools of commercial bank deposits represent genuine competitors to traditional settlement infrastructure. If Circle or other stablecoin issuers can offer faster, cheaper international transfers than official channels, what is the institutional mechanism that forces users back toward central bank money? This is not a technical question—it is a political-economy question about whether regulatory authority can be sustained once the monopoly on payment infrastructure erodes.
The Rome workshop's deliberation on these questions suggests that European regulators are preparing for a world where they no longer control the architecture unilaterally. The answer, as Scotti's framing indicates, is not to resist digitalization but to reshape the institutions that channel it. This likely means stronger coordination between the ECB and national central banks, clearer legal frameworks defining which entities can issue digital assets and under what conditions, and—most importantly—mechanisms ensuring that digital money settlement remains dependent on institutional actors who answer to elected governments or independent central banks with explicit mandates.
For banks, fintechs, and payment processors, this has immediate implications. The regulatory environment will not settle on a choice between "blockchain-based" and "traditional" infrastructure. Instead, it will impose trust requirements that favor entities with established reputational capital and regulatory track records. Startups and decentralized platforms will face higher barriers to competing with official digital currencies. The digitalization of money will proceed, but under institutional guardrails that preserve monetary policy effectiveness and central bank authority.
The stakes extend beyond monetary technocracy. Digital money architecture shapes how efficiently savings flow to productive investment, how quickly crisis interventions can reach households and firms, and whether inflation expectations remain anchored. Get the institutional design wrong, and the eurozone risks a fragmentation of money: official digital euros coexisting with stablecoins, cryptocurrencies, and traditional bank deposits, each with different risk properties and settlement speeds. Get it right, and digitalization becomes a tool for improving monetary transmission rather than undermining it. Scotti's emphasis on trust architecture is a signal that European regulators understand the difference—and are beginning to act on it.
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