Scotti: Trust defines digital money's institutional architecture

Chiara Scotti, Deputy Governor of Banca d'Italia, highlighted that the acceptance of money, whether physical or digital, has always rested on trust, not intrinsic value or technology alone.

Speaking at a workshop on digital assets, Scotti noted that while new technologies offer speed, programmability, and efficiency, these are attributes of the payment instrument, not the source of its value.

The fundamental question for central bank digital currencies (CBDCs), stablecoins, and tokenized deposits is what kind of institutional architecture can deliver trust, resilience, and effective monetary control while fostering innovation.

This architecture involves the interaction of public and private forms of money, infrastructure design, interoperability, and the evolving roles of various institutions.

Oversight and regulation must shape this interaction from the outset to ensure stability and public confidence in the digital monetary landscape.

Scotti outlined a framework of seven key questions to assess digital money, focusing on efficiency, trust, financial stability, and its impact on monetary policy transmission.

She stressed that these instruments should not be compared in isolation but through their underlying design features and settlement structures.

Claims can be public or private, bearer or non-bearer, and anchored in central bank money or settled outside its core infrastructure.

For instance, stablecoins typically circulate as private claims settling outside the central bank core, while properly designed tokenized deposits can preserve the two-tier monetary system.

These architectural choices fundamentally alter how monetary policy influences financial conditions and the real economy, affecting bank funding, market liquidity, and the transmission of policy rates.