The Bank of Italy has warned that President Donald Trump's aggressive push to normalize crypto can ruin the global financial system.
In a report of financial stability published on Tuesday, Roman officials said the growing support of the United States for risks to crypto assets that makes them important that a fall in the future will beat banks, bond markets, and the real economy.
According to the bank report:
“The strong growth of Bitcoin and other high -cost crypto assets means risks not only for investors but also potential for financial stability, given a growing related between the ecosystem of the digital asset, the traditional financial sector, and the real economy.”
They have taught that no one investors are throwing money in crypto. The links between the crypto and the old-school financial world are getting strictly enough to trigger the real fall when things get bad.
Italy raised the alarm to stablecoin risks after Trump's crypto pushed
The Bank of Italy made it clear that Trump's win in November and his move to the office in January opened floods for Crypto in Washington. They featured how US lawmakers, who were riding the momentum of the new administration, were in a hurry to set up a regulation framework for stablecoins.
A bill in the Senate has enough backbone to move forward. The Bank of Italy has warned that this political environment can quickly monitor the integration of crypto into the mainstream.
European officials were also not happy. Francois Villeroy de Galhau of France and Olli Rehn of Finland, both policy manufacturers at the European Central Bank, expressed serious concern about crypto going to mainstream in the United States.
Rehn clearly said on Monday, “I'm worried about the possible mainstreaming of cryptoassets in the US.” European officials are afraid that if Stablecoins, especially pegged dollars, are huge under Trump's watch, the effects of ripple can be hit by economies worldwide.
The Italian bank flagged that apart from dollars-supported coins, there were stablecoins tied to Euro and other properties. They warned that while the dollar tied to the stablecoins was usually held, the rest of the crypto market remains dangerous volatile.
The central Bank of Italy says that wild price swings in these possessions show how bad things can be mistaken if these instruments are digging deeper into the traditional financial system. The Italian report also said:
“After the new US administration was in charge and following its initiatives to promote the use of crypto assets, there was also a temporary but sharp increase in global market prices for these products, including highly imaginative -haaka.”
They emphasized that the higher the overlap between crypto and regular finances, the more fragile the whole system.
Italy said Stablecoin crashing could hit bonds and spread the excitement
The scenario of the Nightmare on the central bank of Italy is a stablecoin provider. The report has been spelled that most of the major Stablecoin releases depends on the short-term US wealth to back their tokens. If one of these gives has collapsed, it can release a furious by the holders who are scrambling to cash out.
“In the event of a failure of one in the latter, there may be a rush to get paid, with a sudden increase in requests for the destruction of holders and the forced sale of reserves ownership,” the report said.
The bank of Italy warned That if everyone tried to sell their treasury handles at the same time, the US government bond market would be vomiting. That stress does not remain contained in either – shock is broken into banks, funds, and other major components of the world economy. They paint a picture where a crypto crash can start a dominoes that have no ready.
The financial stability report was also taught that it was one of the first because Trump's tariffs caused heavy unevenness to the market. Although market tensions have cooled a little since April, the Bank of Italy said the risks were still higher across the board compared to the prior to Trump. Their report has given a reminder that even the small policy moves now brings bigger consequences, thanks to how unstable everything is.
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