Italian Banks Support Digital Euro, Seek Cost Distribution from ECB

Italian banks have voiced their support for the European Central Bank's digital euro initiative, yet they are urging the ECB to distribute the implementation costs over several years. Marco Elio Rottigni, General Manager of the Italian Banking Association, emphasized during a press seminar in Florence that the digital euro represents a notion of digital sovereignty.

However, he pointed out that the project's costs are substantial, particularly in light of the capital expenditures that banks are already facing. Rottigni advocated for a gradual spread of these costs over time to alleviate the financial strain on the sector.

This feedback comes amid a broader context where the central bank digital currency, or CBDC, initiative has encountered some resistance from banks in France and Germany. These institutions are concerned that an ECB-backed retail wallet could siphon deposits away from commercial lenders.

Notably, 137 countries and currency unions, accounting for 98 percent of global GDP, are currently exploring the implementation of a CBDC. According to reports, the ECB's Governing Council has moved the digital euro project into its next phase, following a two-year preparatory period, with a pilot phase anticipated to commence in 2027 and a full rollout expected by 2029, contingent upon the adoption of EU legislation in 2026.

European Parliament member Fernando Navarrete is also leading discussions on a draft report that suggests a scaled-down version of the digital euro to safeguard private payment systems like Wero, which is a collaborative effort among 14 European banks.

Rottigni reiterated that Europe ought to embrace a dual approach, integrating the ECB's digital euro with digital currencies backed by commercial banks, cautioning against falling behind in the digital currency race.

Additionally, the ECB has formalized agreements with seven technology firms to assist in the development of the digital euro, focusing on areas such as fraud and risk management, secure payment data exchange, and software development.

Among the selected firms are Feedzai, a specialist in fraud detection, and Giesecke+Devrient, known for security technology solutions. These firms will also create features like alias lookup, allowing users to transact without needing to know the recipient's payment service provider, as well as offline payment capabilities.

This initiative reflects a significant step in the banking sector's adaptation to digital currencies and the pivotal role of the European Central Bank in this transition.