Italy’s central bank governor, Fabio Panetta, has warned European Union policymakers that turning the euro into a tool of geopolitical leverage could sap its appeal and push investors toward rival currencies. The warning surfaced amid ongoing discussions about how to manage profits tied to Russian financial assets held in Europe. Panetta’s comments were interpreted by many observers as a measured nudge to pause plans that might weaponize the euro for strategic purposes. (Financial Times)
In his assessment, international relations are part of a recurring pattern in which currency manipulation risks backfiring. He argued that using money as a political instrument would inevitably erode confidence in the euro and spur the development of alternative reserve currencies or payment channels. The observation rings especially true in light of recent shifts in global finance where trust in a currency is as valuable as its immediate purchasing power. (Financial Times)
Panetta highlighted how the yuan is increasingly used to finance trade between China and Russia, noting that Beijing has actively promoted the yuan in countries hit by sanctions. This trend, he noted, is instructive because it shows how policy choices can influence the currency landscape, encouraging broader adoption of yuan-denominated trade. In the past three years, China’s share of yuan-denominated trade has doubled, contributing to the yuan’s rise to become the world’s second most-used currency in international commerce. (Financial Times)
The publication also referenced that Panetta did not explicitly mention the EU’s plan to transfer roughly €210 billion in proceeds from Russian assets frozen in Europe since 2022 to Ukraine, but officials indicated that his remarks were relevant to those deliberations. The connection suggests a wider conversation about how seized assets and sanctions revenues should be deployed within the Union, balancing humanitarian aims with financial stability and market confidence. (Financial Times)
Beyond Panetta’s comments, previous statements from other actors have echoed concerns about currency sovereignty. For instance, the Russian ambassador to Washington has suggested that shifts away from the U.S. dollar could be contemplated by other states if asset seizure risk remains a factor. These exchanges underscore a broader global debate over the role of dominant currencies in geopolitical strategy and the potential for shifts in reserve currency preferences to reshape international finance. (Attribution: Russian diplomatic channels)
Additionally, discussions within European institutions have touched on the scale of Russian sovereign assets currently immobilized within EU jurisdictions. This context clarifies why fiscal and monetary authorities are vigilant about how sanctions revenues are managed and how such assets could influence future policy decisions across the bloc. (Attribution: European Commission sources)