Italy’s banks support ECB’s digital euro plan, but want to spread out costs over time: Reuters

5 hours ago7 min read2 comments

The European financial landscape is bracing for a seismic shift as Italy's banking sector has thrown its conditional support behind the European Central Bank's ambitious digital euro project, a development Reuters reports stems from a recent compromise agreement between EU finance ministers and the ECB targeting a 2029 rollout. This endorsement, however, is far from a blank check; it comes with a critical stipulation from the Italian Banking Association (ABI) that the immense operational costs—estimated by some analysts to run into the tens of billions across the eurozone—be amortized over an extended period to prevent a catastrophic hit to bank profitability in a single fiscal year.The digital euro, conceived as a central bank digital currency (CBDC) for retail use, represents the eurozone's most significant monetary innovation since the physical currency's introduction, aiming to counter the rising tide of private cryptocurrencies and digital payment platforms from the US and China that threaten to fragment the European payments market. For institutions like UniCredit and Intesa Sanpaolo, the calculus is complex: while a state-backed digital currency could reduce the costs and risks associated with handling physical cash and enhance financial inclusion, it also introduces a formidable new competitor for retail deposits, the lifeblood of traditional banking.The core of the banks' apprehension lies in the potential for 'digital runs,' where in times of crisis, panicked citizens could instantaneously shift their deposits into risk-free digital euros held directly with the ECB, bypassing commercial banks entirely and destabilizing the entire credit system. Consequently, the ABI's lobbying efforts are intensely focused on design features, pushing for stringent holding limits, a non-remunerated structure (so it doesn't pay interest like a savings account), and robust privacy safeguards that align with GDPR to maintain public trust.From a macroeconomic perspective, the ECB's move is a strategic gambit to maintain monetary sovereignty; as Federal Reserve Chair Jerome Powell cautiously explores a digital dollar and China aggressively pilots the digital yuan, the eurozone cannot afford to be left behind in the global race for the future of money. The compromise with EU ministers, which also addresses offline functionality for broader accessibility, signals that the political will exists, but the devil is in the financial and technical details. The phased cost absorption plan demanded by the Italians is likely to become a template for other national banking associations across the bloc, from Germany's notoriously cautious Bundesbank to France's more innovation-friendly financial institutions, setting the stage for a delicate balancing act between technological progress and financial stability that will define European finance for the next decade.

#featured

#digital euro

#ECB

#Italy banks

#cost distribution

#2029 rollout

#EU finance ministers

Stay Informed. Act Smarter.

Get weekly highlights, major headlines, and expert insights — then put your knowledge to work in our live prediction markets.