The Italian Banking Association (ABI) has thrown its weight behind the European Central Bank’s (ECB) digital euro initiative, while also highlighting the necessity of a phased approach to deal with its financial implications. Marco Elio Rottigni, who serves as the General Manager of ABI, described the digital euro as a mark of digital sovereignty, urging Europe to keep pace with the rapid global digital finance developments.
What Does Digital Sovereignty Mean for Europe’s Financial Landscape?
Speaking at a press event in Rome, Rottigni emphasized Italian banks’ support for the digital euro, but stressed that the expenses related to its implementation should not be borne all at once. He elaborated on the strategic relevance of this initiative, asserting that it represents a significant step for Europe’s digital control over its financial landscape.
The initiative has gained momentum with an accord reached by EU finance ministers, ECB President Christine Lagarde, and European Commission Vice President Valdis Dombrovskis. This agreement provides EU ministers the say in the issuance and limit of digital euro holdings in citizen wallets, catering to apprehension over potential bank withdrawals.
Will a Dual System Offer a Balanced Approach?
ABI suggests a dual-track approach for the digital euro—one involving central bank digital currency (CBDC) and another involving digital currencies from commercial banks. Rottigni explained,
“Europe shouldn’t lag behind; thus, both central banks and commercial banks should advance simultaneously in the digital currency ecosystem.”
However, not all are on board with this plan. Criticisms have surfaced from various quarters, including Germany’s leading banking lobby, the German Banking Industry Committee, and conservative members of the European Parliament. Fernando Navarrete, a member of the European Parliament, recommends focusing the digital euro’s role specifically in payment systems that aren’t always connected to the internet.
According to Navarrete, the existing central bank infrastructure is considered sufficient for intermediary transactions, and the inclusion of the digital euro in wholesale payment systems might be unnecessary. These discussions reflect Europe’s struggle to find the right balance for adopting digital financial solutions.
The pilot phase of this digital currency is scheduled to start in 2027, with the final roll-out anticipated by 2029. Until then, the debate around its strategic and economic impacts will likely continue.
- Italian banks advocate for gradual implementation of the digital euro to manage costs.
- EU finance leaders agree on controlling digital euro issuance and holding limits.
- A dual-system approach is proposed, merging CBDC with commercial bank digital currencies.
The digital euro’s potential to reshape Europe’s financial architecture hangs in the balance as it ignites different viewpoints across the continent. This initiative could alter the future of European banking and digital finance on a monumental scale.
