Italy Banks Push Back on Digital Euro: Who Pays the Bill?

The digital euro is coming — probably by 2029. But Italy’s banking establishment just raised a critical question: who covers the infrastructure costs? This week, Marco Elio Rottigni from the Italian Banking Association (ABI) signaled strong backing for the European Central Bank’s digital currency initiative, yet pointedly noted that setting up this system shouldn’t fall entirely on commercial banks’ balance sheets.

The Sovereignty Play With a Price Tag

Italian banks aren’t against digital innovation. They frame the digital euro as “a milestone for European digital sovereignty” — a way for Europe to strengthen financial independence and modernize cross-border payments. The real issue is timing and burden-sharing. Rottigni emphasized that while the vision is sound, “expenses are heavy,” and investment costs need to be distributed gradually as the infrastructure rolls out, not dumped upfront on the banking sector.

This stance reflects a practical concern: rushed timelines often mean rushed costs, and someone has to absorb them. Italy wants those costs managed strategically over the project’s lifespan.

The Timeline Takes Shape

Here’s the roadmap EU finance ministers recently hammered out with ECB President Christine Lagarde:

• 2026: Critical legislative approval vote
• 2027: Pilot phase begins
• 2029: Full launch (if all goes as planned)

Member states will retain direct control over whether the digital euro even launches, plus authority over how much digital money citizens can hold — a safeguard designed to prevent panic withdrawals that could destabilize traditional banking. If Europe hits these targets, it would join a small club of major economies with a state-backed digital currency actually in circulation.

Italy’s Counter-Proposal: The Dual-Track System

Rather than an ECB-only approach, Rottigni floated the idea of a twin system — central bank digital euro running parallel to commercial bank-issued digital currencies. This dual structure could accelerate adoption (private banks move faster) while preserving ECB oversight. Rottigni pointed to the U.S. GENIUS Act on stablecoin regulation as proof that competitive fintech jurisdictions are already adapting at speed.

Northern Europe Pumps the Brakes

Not everyone shares Italy’s enthusiasm for a robust digital euro. Germany’s banking industry has raised concerns about deposit drain and the blurring line between central and commercial money. Conservative MEP Fernando Navarrete has pushed harder — advocating for a stripped-down version limited to offline retail transactions only. Navarrete argues the digital euro shouldn’t interfere with existing bank-to-bank settlement systems, where the Eurosystem already functions efficiently.

The Deeper Tension

This debate exposes a fundamental challenge: how does Europe modernize its monetary system without destabilizing the existing banking infrastructure? The ECB sees digital currency as essential for financial sovereignty and payment modernization. Banks worry about capital flight during crises. Italy, caught in the middle, is pushing for a pragmatic path forward.

The digital euro is shaping up as much a political project as an economic one — a test of whether Europe’s fragmented financial interests can align on a common digital future.