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

• Why Is Italy Supporting the Digital Euro?
• What Are the Key Concerns About the Digital Euro?
• When Will the Digital Euro Launch?
• How Are Other Regions Advancing Their CBDC Plans?
• What Risks Do CBDCs Pose?
• FAQ

Italy’s banking sector has thrown its weight behind the European Central Bank’s (ECB) digital euro initiative, calling it a crucial step for Europe’s digital sovereignty. However, banks are pushing for a flexible, long-term payment plan to manage the "very high" implementation costs. Meanwhile, the ECB is advancing the project despite resistance from some European banks, with a pilot phase expected by 2027 and a full launch by 2029. Other regions, like China, are already making strides with their own central bank digital currencies (CBDCs), while the U.S. focuses on regulating private stablecoins.

Why Is Italy Supporting the Digital Euro?

Italy’s banking sector, represented by the Italian Banking Association (ABI), has publicly endorsed the ECB’s digital euro project. Marco Elio Rottigni, ABI’s General Director, emphasized that the digital euro embodies Europe’s push for digital sovereignty, reducing reliance on non-European payment providers like U.S. card networks and stablecoins. However, Italian banks are cautious about the steep costs, urging the ECB to spread these expenses over a longer period to avoid straining their capital expenditures.

What Are the Key Concerns About the Digital Euro?

While the digital euro aims to strengthen monetary sovereignty and curb dependence on foreign payment systems, its legislative progress has been slow. French and German banks have resisted, fearing mass withdrawals from traditional bank accounts as users switch to the ECB’s digital wallet. Despite this, the ECB has moved the project into its next phase after a two-year preparation period. Rottigni advocates a "dual-track approach," combining a central bank digital currency with private bank-issued digital currencies to keep Europe competitive.

When Will the Digital Euro Launch?

The ECB plans a pilot phase starting in 2027, pending EU legislation approval in 2026. The official rollout is slated for 2029. Meanwhile, Fernando Navarrete, a European Parliament member, has proposed a scaled-down version of the system to accommodate private payment initiatives like Wero, backed by 14 European lenders. This reflects a balancing act between innovation and financial stability.

How Are Other Regions Advancing Their CBDC Plans?

China leads the pack, having rolled out its digital yuan in 18 countries by 2025, including Thailand and the UAE. The UK is testing its "Britcoin," while Japan explores a digital yen without urgency. Sweden’s e-krona, an open-source digital currency with partial anonymity, is being trialed for small payments. Brazil’s DREX integrates social welfare tracking, and the U.S. is focusing on regulating private stablecoins rather than issuing a CBDC due to surveillance concerns.

What Risks Do CBDCs Pose?

CBDCs introduce systemic risks like cyberattacks and bank runs, demanding robust governance and security measures. Observers note that China’s aggressive CBDC push is partly about maintaining currency hegemony. For Europe, the challenge is balancing innovation with financial stability, ensuring the digital euro doesn’t disrupt traditional banking.

FAQ

Why is Italy advocating for the digital euro?

Italy sees the digital euro as vital for Europe’s digital sovereignty, reducing reliance on foreign payment systems. However, banks want the ECB to distribute the high implementation costs over time.

What’s the timeline for the digital euro’s launch?

A pilot phase is expected in 2027, with full deployment by 2029, pending EU legislation approval in 2026.

How does China’s digital yuan compare?

China has already implemented its digital yuan in 18 countries, positioning it as a tool for currency control and global influence.

Are there risks with CBDCs?

Yes, including cyber threats and bank runs, requiring strong security and governance frameworks.