fintech
The race to create a European digital currency is gaining new momentum, and Italian banks are hoping to have a seat at the table.
Important points
- Italy’s banking sector supports the ECB’s digital euro, but wants cost-sharing over the long term.
- The project could start in 2029, with the pilot phase potentially starting in 2027, pending EU approval.
- Italy is proposing a dual system combining an ECB-issued digital currency and a commercial digital currency.
- Conservatives in Germany and the EU want a scaled-down, lower-risk version.
The Italian Banking Association (ABI) declared He supports the European Central Bank’s digital euro, but argues that its rollout should not burden commercial banks with huge upfront costs.
At a media conference this week, ABI general manager Marco Elio Rottini described the digital euro as “a milestone towards Europe’s digital sovereignty.” But he cautioned that banks cannot shoulder the entire financial burden of building the infrastructure needed to make the system work.
“This is a project that embodies sovereignty, but it is also a project that costs a lot of money,” Rottini said, calling for investment costs to be distributed in stages as the system evolves.
A divided Europe heading into 2029
A digital euro, envisioned as a central bank-issued currency available to all EU citizens, is still years away, but momentum is building. EU Finance Ministers and ECB President Christine Lagarde recently reached a compromise agreement with European Commissioner Valdis Dombrovskis to clarify how the project should proceed.
Under the agreement, member states will have a direct role in deciding whether to launch a digital euro at all, and how much digital money individuals can hold as a safeguard to allay fears of mass withdrawals from commercial banks.
If lawmakers approve the next bill in 2026, a pilot phase could begin by 2027, followed by a full-scale launch in 2029, making Europe one of the few major economies with state-backed digital currencies in circulation.
Italy’s “twin system” vision
Rottini suggested that Europe should not rely solely on the ECB’s design. Instead, he advocated a twin system that could be deployed more quickly: a central bank digital euro and a commercial bank-issued digital currency.
He cited the United States, where policymakers have already introduced the GENIUS Act to regulate stablecoins, as an example of how other financial systems are rapidly adapting to digital finance.
“What Europe cannot do is watch other countries move forward while we have technical discussions,” he said.
northern skepticism
Not everyone shares Italy’s enthusiasm. The German Banking Industry Council, which represents the country’s largest financial institutions, has expressed concern about the impact of the digital euro on traditional banking. Critics argue this could drain deposits and blur the line between central and commercial money.
In Brussels, conservative lawmaker Fernando Navarrete also pushed back, proposing a simplified version of the currency that would be limited to offline retail payments. Navarrete argues that a digital euro should not replace existing payment systems used between banks and payment service providers. According to him, the Eurosystem is already operating efficiently in this area.
Balancing innovation and stability
This debate captures the crossroads Europe currently stands at. The ECB hopes a digital euro will strengthen financial independence and modernize cross-border payments, but banking groups fear it could lead to instability or capital flight in times of crisis.
Italy’s position reflects broader tensions over how to modernize without dismantling the structures that underpin Europe’s monetary system. Although the digital euro is still years away from circulation, it is taking shape as both an economic and a political project, and will test the coherence of Europe’s fiscal vision.
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