The Italian Banking Association (ABI) has expressed strong support for the European Central Bank’s (ECB) digital euro initiative. However, the association also emphasizes the necessity of a phased approach to manage the financial implications associated with its implementation. Marco Elio Rottigni, the General Manager of ABI, highlighted the digital euro as a crucial element of digital sovereignty, stressing the importance for Europe to keep pace with the rapid advancements in global digital finance.
Digital Sovereignty and Europe's Financial Landscape
During a press event held in Rome, Rottigni reiterated Italian banks' backing for the digital euro. He underscored that the expenses related to its rollout should not be incurred all at once, advocating for a more gradual integration. Rottigni elaborated on the strategic significance of this initiative, asserting that it represents a pivotal step for Europe in asserting its digital control over its financial landscape.
The digital euro initiative has seen increasing momentum, marked by a recent accord reached among EU finance ministers, ECB President Christine Lagarde, and European Commission Vice President Valdis Dombrovskis. This agreement grants EU ministers a say in the issuance and the limit of digital euro holdings within citizen wallets, addressing concerns about potential bank runs.
Exploring a Dual System for a Balanced Approach
ABI has proposed a dual-track approach for the digital euro. This approach would encompass one track for central bank digital currency (CBDC) and another for digital currencies issued by commercial banks. Rottigni explained the rationale behind this proposal:
“Europe shouldn’t lag behind; thus, both central banks and commercial banks should advance simultaneously in the digital currency ecosystem.”
Despite this proposal, the plan has encountered criticism from various entities, including Germany’s leading banking lobby, the German Banking Industry Committee, and certain conservative members of the European Parliament. Fernando Navarrete, a Member of the European Parliament, has suggested that the digital euro's role should be specifically focused on payment systems that do not require constant internet connectivity.
Navarrete's view is that the existing central bank infrastructure is adequate for intermediary transactions, and the inclusion of the digital euro in wholesale payment systems might be redundant. These ongoing discussions highlight Europe's challenge in finding the optimal balance for adopting new digital financial solutions.
The pilot phase for this digital currency is slated to commence in 2027, with the full rollout anticipated by 2029. In the interim, the debate surrounding its strategic and economic ramifications is expected to persist.
- •Italian banks are advocating for a gradual implementation of the digital euro to effectively manage associated costs.
- •EU finance leaders have reached an agreement to have oversight over the issuance and holding limits of the digital euro.
- •A dual-system approach has been proposed, which would integrate CBDC with digital currencies from commercial banks.
The potential of the digital euro to fundamentally reshape Europe’s financial architecture remains a subject of intense discussion, igniting diverse viewpoints across the continent. This initiative holds the promise of significantly altering the future of European banking and digital finance on a large scale.