Bank of Italy models Ether-to-zero impact on Ethereum security and settlement

The Bank of Italy has modelled how a collapse of Ether’s price to zero could affect Ethereum’s security and its capacity to process and settle transactions, treating the network as critical financial infrastructure rather than merely a speculative asset. In a research paper titled 'What if Ether Goes to Zero?

How Market Risk Becomes Infrastructure Risk in Crypto,' Bank of Italy economist Claudia Biancotti examines how an extreme price shock to ether (ETH) might change validators’ economic incentives. The paper models a scenario in which rewards paid in ETH lose value, prompting some validators to exit, which would reduce the stake securing the network, slow block production and weaken the blockchain’s resilience to attacks and its ability to guarantee timely final settlement.

Biancotti frames ETH as a core input to settlement infrastructure used by stablecoins and tokenized assets, arguing that market risk in the native token can morph into operational and infrastructure risk for onchain financial activity and payment or settlement use cases. The paper notes similar concerns from other authorities: the IMF and the ECB have warned that large stablecoins could pose systemic risks, and an ECB Financial Stability Review report published in November 2025 said severe shocks could trigger runs, asset fire sales and deposit outflows.

The Bank of Italy concludes regulators face a trade-off over whether supervised intermediaries should rely on public blockchains.

Key Topics

Crypto, Ether, Ethereum, Claudia Biancotti, Validators, Stablecoins