Italy Backs Digital Euro but Urges ECB to Distribute High Implementation Costs by 2025

• Why Is Italy’s Banking Sector Supporting the Digital Euro?
• What Are the Key Challenges Facing the Digital Euro?
• How Does Europe’s Progress Compare Globally?
• What Systemic Risks Do CBDCs Pose?
• FAQ: Your Digital Euro Questions Answered

Italy's banking sector has thrown its weight behind the European Central Bank's (ECB) digital euro project, calling it a "vital step" for Europe's digital sovereignty. However, banks are pushing for a flexible long-term payment plan to manage the "substantial" implementation costs. Meanwhile, other regions like China and the UK are racing ahead with their CBDC plans, while the US remains cautious. Here’s a DEEP dive into the latest developments, risks, and global progress on central bank digital currencies (CBDCs).

Why Is Italy’s Banking Sector Supporting the Digital Euro?

Italy’s financial institutions have publicly endorsed the ECB’s digital euro initiative, framing it as a strategic MOVE to reduce reliance on non-European payment providers like US card networks and stablecoins. "We support the digital euro because it embodies digital sovereignty," stated a representative from the Italian Banking Association. However, enthusiasm comes with a caveat: banks are urging the ECB to distribute the high implementation costs over time, citing ongoing capital expenditures. Analysts from BTCC note that this balancing act reflects broader tensions between innovation and financial sustainability in the EU’s CBDC rollout.

What Are the Key Challenges Facing the Digital Euro?

The ECB’s two-year preparation phase for the digital euro concluded recently, but legislative hurdles persist. French and German banks fear mass adoption could drain deposits if citizens shift daily payments to ECB-held digital wallets. A phased launch is now expected, with a pilot in 2027 and full deployment by 2029—pending EU legislation approval in 2026. Fernando Navarrete, a Spanish MEP, has proposed a scaled-back version to safeguard private payment initiatives like Wero, backed by 14 European credit institutions. "A dual approach—combining a central bank digital currency with commercial bank digital money—is essential to avoid Europe falling behind," argued economist Marco Rottigni.

How Does Europe’s Progress Compare Globally?

While the EU debates, China’s digital yuan is already operational in 18 countries, including Thailand and the UAE, with full deployment expected by 2025. The UK’s "Britcoin" remains in testing, Japan’s digital yen lacks urgency, and Sweden’s e-krona trials partial anonymity for small payments. Brazil’s DREX, integrated with smart contracts for social welfare, highlights CBDCs’ potential for financial inclusion. In contrast, the US has banned Federal Reserve-issued CBDCs over surveillance concerns, focusing instead on stablecoin regulation.

What Systemic Risks Do CBDCs Pose?

Cyberattacks and digital bank runs top the list, demanding robust governance. China’s rapid rollout has sparked debates about data privacy, while the ECB emphasizes "security-first" design. "The trade-off between innovation and stability is real," admits a BTCC market strategist. TradingView data shows mixed investor sentiment, with crypto markets reacting cautiously to CBDC news.

FAQ: Your Digital Euro Questions Answered

When will the digital euro launch?

The ECB plans a 2027 pilot, with full launch expected by 2029 if legislation passes in 2026.

Why are Italian banks concerned about costs?

Implementation expenses coincide with other capital demands, prompting calls for phased funding.

How does the digital euro differ from stablecoins?

It’s a central bank liability, not private-issued, ensuring direct ECB backing—unlike stablecoins pegged to assets.