Italian Banks Back Digital Euro But Urge ECB to Share Burden of Implementation Costs
Italian Banks Express Support for European Central Bank’s Digital Euro Initiative, But Call for Implementations Costs to be Spread Out Over Several Years
Italian banks have reaffirmed their support for the European Central Bank’s (ECB) digital euro initiative, which embodies the concept of digital sovereignty. However, they are calling for the implementation costs to be spread out over several years due to the financial burden it imposes on the sector.
The comments were made by Marco Elio Rottigni, General Manager of the Italian Banking Association (ABI), during a press seminar in Florence, reported by Reuters on Friday. "We’re in favor of the digital euro because it embodies a concept of digital sovereignty," said Rottigni. The digital euro is an alternative to physical currency that could be used for transactions and would provide more financial inclusion.
However, despite their support, Italian banks are not unaware of the potential risks associated with the digital euro. Rottigni acknowledged that costs for the project are "very high in the context of the capital expenditure banks must sustain." He added that these costs could potentially be spread out over time to minimize their impact on banks’ finances.
This comes as no surprise, given the concerns expressed by some French and German banks regarding the potential for an ECB-backed retail wallet to drain deposits from commercial lenders. While the digital euro has been hailed as a symbol of trust in our common destiny by ECB head Christine Lagarde, not everyone is convinced of its merits.
According to various reports, 137 countries and currency unions, representing 98% of global GDP, are exploring central bank-issued stablecoins known as central bank digital currencies (CBDCs). These projects aim to provide a safe and efficient way for people to send and receive funds digitally, without relying on intermediaries like commercial banks.
The concept of CBDCs is gaining traction globally. However, one of the challenges facing the ECB’s flagship project is its potential impact on private payment systems. European Parliament member Fernando Navarrete has recently presented a draft report calling for a scaled-down version of the digital euro to minimize disruption to existing financial infrastructure.
Rottigni believes that Europe should adopt a "twin approach" by combining the digital euro with commercial bank-backed currencies, enabling these institutions to maintain control over transactions while leveraging the efficiencies offered by CBDCs. He emphasized the importance of not falling behind in this rapidly evolving landscape: "What Europe shouldn’t do is fall behind."
Despite some skepticism about its impact on banks’ profits, the development of a digital euro has made significant progress. The ECB recently finalized framework agreements with seven major technology providers to support the creation and use of a potential digital euro. This collaborative effort aims to establish a robust security architecture for transactions that can be verified offline, protecting users against fraud and ensuring seamless payments.
Key features expected from this partnership include "alias lookup," which would allow individuals to send or receive funds without having knowledge of their recipient’s payment provider, as well as the ability to process offline transactions. This level of innovation paves the way for broader adoption by consumers, financial institutions, and regulators alike.
In related news, Malaysia is embarking on an asset tokenization roadmap, with plans to pilot this technology over the next three years. Meanwhile, European fintech companies remain key players in the development of a digital euro. The signing of framework agreements between the ECB and seven tech firms – including Feedzai and Giesecke+Devrient (G+D) – covers critical aspects like fraud management and secure data exchange.
Looking ahead to 2026, when proposed EU legislation takes effect, it has become clear that progress toward a more digitized and inclusive financial system is underway. However, it remains essential for banks, governments, and tech companies to work together towards developing practical solutions that maximize consumer benefit while minimizing risks associated with new technologies.
Conclusion
Italian support for the digital euro initiative highlights the increasing momentum behind central bank-issued stablecoins worldwide. Despite concerns over costs and implementation, these institutions see an opportunity for growth in this realm. As governments around the world move toward a more inclusive and efficient financial future through CBDCs, stakeholders must join forces to achieve mutually beneficial objectives.
