At a Glance
- Italian banks, represented by the Italian Banking Association (ABI), support the European Central Bank’s (ECB) digital euro initiative, emphasizing its role in digital sovereignty.
- They have requested that the significant implementation costs be spread over several years to manage the financial impact on the sector.
- The ECB aims to launch the digital euro by 2029, with preparatory and pilot phases scheduled to begin in the coming years.
- While supportive, Italian banks advocate for a dual approach, combining the ECB’s digital euro with commercial bank-backed digital currencies to maintain competitiveness.
- The ECB is actively engaging technology providers to develop the necessary infrastructure and features for the digital euro.
Italian Banks Back Digital Euro, Seek Cost Deferral
Italian banking institutions have voiced their support for the European Central Bank’s (ECB) initiative to introduce a digital euro. However, they are expressing concerns about the substantial financial burden the project places on the sector, advocating for the implementation costs to be distributed over a period of several years.
“We’re in favour of the digital euro because it embodies a concept of digital sovereignty,” stated Marco Elio Rottigni, General Manager of the Italian Banking Association (ABI). He was speaking at a press seminar in Florence, as reported by Reuters.
Rottigni further elaborated on the cost aspect, noting, “Costs for the project, however, are very high in the context of the capital expenditure banks must sustain. They could be spread over time.”
These comments emerge amid some resistance from French and German banks towards the central bank digital currency (CBDC) project. These institutions fear that the introduction of an ECB-backed retail wallet could potentially lead to a significant outflow of deposits from commercial lenders.
ECB Sets Timeline for Digital Euro Launch
The ECB’s Governing Council has approved the progression of the digital euro project into its next phase. Following a two-year preparatory period, a pilot phase is anticipated to commence in 2027. A full rollout is tentatively scheduled for 2029, contingent on the adoption of relevant EU legislation in 2026.
European Parliament member Fernando Navarrete, leading the parliamentary review of the proposal, has presented a draft report suggesting a scaled-down version of the digital euro. This approach aims to safeguard private payment systems, such as Wero, a collaborative initiative involving 14 European banks.
Rottigni has proposed that Europe adopt a “twin approach,” which would involve the coexistence of the ECB’s digital euro with digital currencies backed by commercial banks. He stressed the importance of Europe not falling behind in this evolving financial landscape.
ECB Accelerates Digital Euro Development with Tech Partnerships
In the previous month, the ECB finalized framework agreements with seven technology providers to support the ongoing development of a potential digital euro. These agreements encompass crucial areas such as fraud and risk management, secure payment data exchange, and software development.
Notable firms involved in these partnerships include Feedzai, a specialist in fraud detection, and Giesecke+Devrient (G+D), a company focused on security technology.
💡 The selected technology partners are tasked with developing key features for the digital euro, including an “alias lookup” function. This feature will enable users to conduct payments without needing to know the recipient’s specific payment service provider. Additionally, offline payment capabilities are being developed.
Expert Summary
The Italian banking sector is broadly in favor of the digital euro, recognizing its importance for digital sovereignty, but requires financial relief through cost deferrals. The ECB is moving forward with development, aiming for a 2029 launch, while navigating the need to harmonize with existing private payment systems and secure technological partnerships.
