McCarthy currently turns out for Wigan Athletic in the Premier League and has earned 11 senior international caps.
He is, however, still only 22 years of age and continues to work on his game at all levels.
Trapattoni feels it is time that he started to express himself on a regular basis, with the vastly-experienced Italian of the opinion that McCarthy could grace the very top of the game if he plays with confidence.
He said: "James has the good qualities but I have told him, 'I will punch you if you don't stop being shy'.
"Sure he can play for one of the top clubs in England. He shoots, he sees the pass immediately, sees the ball and always has the solutions.
"He has to be confident and say: 'I am James McCarthy. I can do this'."