According to Cointelegraph, the Bank of Italy has conducted a study to assess the impact on Ethereum's security and settlement capabilities if the price of Ether were to plummet to zero. The research, led by economist Claudia Biancotti, explores the implications of such a drastic price drop on Ethereum-based financial services, which rely on the network for transaction processing and settlement. The study emphasizes the importance of viewing Ethereum not merely as a speculative asset but as a critical component of financial infrastructure.
Biancotti's research highlights the connection between validators' economic incentives and the stability of the blockchain supporting stablecoins and other tokenized assets. The paper models a scenario where validators, who earn rewards in ETH, might choose to exit if the token's value collapses, leading to a reduced total stake securing the network. This could slow block production and weaken Ethereum's resilience against attacks, potentially compromising the timely settlement of transactions. The study argues that Ethereum is increasingly used as a settlement layer for financial instruments, making it essential to consider how fluctuations in Ether's value can impact the reliability of the underlying infrastructure.
The Bank of Italy's analysis suggests that market risk in the base token can evolve into operational and infrastructure risk for instruments built on Ethereum, such as fiat-backed stablecoins and tokenized securities. The paper warns that disruptions could extend beyond speculative trading, affecting payment and settlement use cases that are under regulatory scrutiny. Other authorities, including the International Monetary Fund and the European Central Bank (ECB), have also expressed concerns about the systemic importance of large stablecoins and their potential financial stability risks. An ECB Financial Stability Review report from November 2025 highlighted the vulnerabilities of stablecoins and their connections to traditional finance, warning of possible runs and asset fire sales in the event of severe shocks.
The Bank of Italy concludes that regulators face a challenging decision regarding the use of public blockchains in financial services. They must choose between deeming current public chains unsuitable for regulated financial infrastructure due to their reliance on volatile native tokens or allowing their use with risk mitigation measures. These measures could include business continuity plans, contingency chains, and minimum standards for economic security and validators.
