Support for Digital Euro Grows Among Italian Banks with Cost Concerns

Italian banks have expressed their endorsement for the European Central Bank’s digital euro initiative, while stressing the necessity to distribute implementation costs over an extended timeframe to alleviate the financial strain on the sector.

“We’re in favour of the digital euro because it embodies a concept of digital sovereignty,” said Marco Elio Rottigni, General Manager of the Italian Banking Association (ABI), during a press seminar in Florence, Reuters reported.

“Costs for the project, however, are very high in the context of the capital expenditure banks must sustain. They could be spread over time,” Rottigni added.

The concerns come amid the central bank digital currency (CBDC) project facing hesitance from several French and German banks, which fear that an ECB-backed retail wallet might siphon deposits from commercial banks.

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

ECB Targets 2029 for Digital Euro Launch

At its recent meeting, the ECB’s Governing Council advanced the digital euro project into its next phase after a two-year preparation period. A pilot phase is anticipated to begin in 2027, with a full rollout projected for 2029, contingent upon the ratification of EU legislation in 2026.

European Parliament member Fernando Navarrete is leading the review of the proposal and presented a draft advocating for a reduced-scale version of the digital euro to safeguard private payment systems like Wero, a collaboration of 14 European banks, as per the report.

Rottigni suggested that Europe should adopt a “twin approach,” amalgamating the ECB’s digital euro with digital currencies supported by commercial banks. “What Europe shouldn’t do is fall behind,” he remarked.

ECB Establishes Partnerships with Tech Companies for Digital Euro Development

Recently, the ECB finalized framework agreements with seven technology providers aimed at bolstering the development of a prospective digital euro. The agreements encompass fraud and risk management, secure payment data exchange, and software development.

Among the firms involved are fraud-detection specialist Feedzai and security technology company Giesecke+Devrient (G+D). The ECB indicated that these firms would also aid in developing features such as “alias lookup,” permitting users to execute payments without knowing the recipient’s payment service provider, along with offline payment capabilities.