The Bank of Italy has published a detailed research paper examining the systemic risks posed by Ethereum's infrastructure, specifically modeling what would happen to the network's security and settlement capacity if the price of Ether (ETH) collapsed to zero. The paper, titled "What if Ether Goes to Zero? How Market Risk Becomes Infrastructure Risk in Crypto," was authored by economist Claudia Biancotti and treats Ethereum not merely as a speculative asset but as critical financial infrastructure.
The central bank's analysis focuses on the economic incentives of Ethereum's validators, who are rewarded in ETH. The paper argues that if ETH's price experienced a catastrophic decline, a rational portion of validators would exit the network. This exodus would reduce the total stake securing the blockchain, slow block production, and weaken Ethereum's ability to withstand attacks and guarantee timely transaction finality.
"Rather than treating Ether purely as a volatile investment, the study frames it as a core input into the settlement infrastructure used by a growing share of onchain financial activity," the report states. This shift in perspective allows regulators to trace how market risk in the base token could transform into operational and infrastructure risk for the financial instruments built on top of Ethereum, including fiat-backed stablecoins and tokenized securities.
The Bank of Italy's warning extends to the broader financial system, noting that Ethereum processes billions in daily transaction value and serves as the settlement layer for major stablecoins like USDC and USDT, as well as tokenized real-world assets. The report identifies three primary channels for potential financial contagion: payment system disruption, settlement failure, and broader market confidence erosion.
The research aligns with concerns from other international bodies. The European Central Bank (ECB) and the International Monetary Fund (IMF) have previously warned that large stablecoins could become systemically important and pose financial stability risks if adoption broadens. An ECB Financial Stability Review in November 2025 highlighted vulnerabilities that could trigger runs and asset fire sales.
Concluding the paper, the Bank of Italy presents regulators with a difficult trade-off. One option is to deem public blockchains like Ethereum unsuitable for regulated financial infrastructure due to their dependence on volatile native tokens. The alternative is to permit their use while imposing stringent risk mitigation measures, such as business-continuity plans, contingency chains, and minimum standards for economic security and validator requirements.
