Italian Banks Support Digital Euro But Request Cost Mitigation from ECB

Italian banks back digital euro but urge ECB to spread out costs: Reuters

Italian banks have shown their backing for the European Central Bank’s (ECB) initiative to launch a digital euro. However, they are urging the ECB to distribute the project’s costs over several years to alleviate the financial strain on the banking sector.

“The digital euro represents a notion of digital sovereignty,” stated Marco Elio Rottigni, General Manager of the Italian Banking Association (ABI), during a recent seminar in Florence, as reported by Reuters. He emphasized that while the banks support the concept, the project’s costs are significant in light of the capital expenses banks will face. “These costs could be managed more effectively if they were spread over time,” Rottigni added.

This request comes at a time when the central bank digital currency (CBDC) effort faces opposition from some French and German banks, who are concerned that a retail wallet backed by the ECB could lead to a depletion of deposits held by commercial banks.

137 countries and currency unions, representing 98% of global GDP, are exploring a CBDC. Source: CBDC Tracker

Key Takeaways:

Italian banks support the ECB’s digital euro initiative but request cost distribution over the years.
ECB plans the digital euro's pilot phase to begin in 2027, with full launch tentatively set for 2029.
A collaborative approach is suggested to combine ECB's digital euro with commercial bank digital currencies.
The ECB has secured agreements with technology providers to aid in the development of the digital euro.

ECB Aims for 2029 Digital Euro Launch

During its meeting from October 29–30 in Florence, the ECB's Governing Council decided to progress with the digital euro initiative into its next phase, following a two-year preparatory period. The ECB aims to start a pilot phase in 2027, with the full launch anticipated for 2029, depending on legislative approval from the EU expected in 2026.

European Parliament member Fernando Navarrete, who is overseeing the parliament's review of the digital euro proposal, recently introduced a draft report suggesting a more limited version of the digital euro. This version is intended to safeguard existing private payment systems, like Wero, which is a collaborative effort involving 14 European banks.

Rottigni emphasized that Europe should adopt a "twin approach," integrating the ECB's digital euro with digital currencies supported by commercial banks. “Falling behind is not an option for Europe,” he stressed.

ECB Partners with Tech Firms for Digital Euro Development

Last month, the ECB formalized framework agreements with seven technology firms to assist in the development process of a potential digital euro. These agreements encompass areas such as fraud prevention, risk management, secure payment data exchange, and software development.

Among the chosen firms are Feedzai, a specialist in fraud detection, and Giesecke+Devrient (G+D), a security technology provider. The ECB disclosed that these firms will also work on developing features like “alias lookup,” which would allow users to send or receive payments without needing to know the recipient’s payment service provider, as well as capabilities for offline payments.

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