Europe's Push for Digital Currency: Italy Charts Its Own Course

Europe is accelerating its journey toward a central bank digital currency, and Italy’s financial institutions are determined to shape the outcome. Rather than accepting the European Central Bank’s blueprint wholesale, the Italian banking sector is advocating for a more nuanced approach — one that distributes implementation burdens fairly across the financial ecosystem.

Italy’s Case for Cost-Sharing and a Parallel Track

During recent remarks, Marco Elio Rottigni, general manager of the Italian Banking Association (ABI), framed the digital currency initiative as essential for European digital currency sovereignty. However, he pushed back against a crucial assumption: that commercial banks should bear the primary financial burden of infrastructure development.

“This represents a fundamental shift in how Europe manages its money,” Rottigni explained, “but the investment required demands a shared responsibility model rather than shifting costs onto individual institutions.”

The ABI’s position reflects a pragmatic concern — establishing the technical systems needed to support a digital euro will require substantial capital expenditure. Italy is proposing that these costs be staged over time, allowing banks to adapt gradually rather than face a sudden financial shock when the system goes live.

A Two-Tier Vision: ECB-Issued and Commercial Digital Currencies

More provocatively, Italy is pushing for what it calls a twin system architecture. Under this model, the ECB would issue one digital currency version while commercial banks simultaneously launch their own digital money products. This parallel approach could accelerate adoption and allow private financial institutions to retain competitive advantages in the digital space.

Rottigni pointed to the United States as evidence this model works. Washington has already passed the GENIUS Act to establish guardrails for stablecoin regulation, demonstrating that other major economies are rapidly modernizing their financial infrastructure. Europe risks falling behind if it moves too cautiously, the ABI suggests.

Timeline Takes Shape: Pilot by 2027, Full Launch by 2029

The implementation roadmap is becoming clearer. Following recent negotiations between EU finance ministers, ECB President Christine Lagarde, and European Commissioner Valdis Dombrovskis, a pathway has emerged. Member states will retain control over key decisions: whether the digital currency launches at all, and what limits individuals face on holdings — a safeguard designed to prevent sudden capital flight from the traditional banking system.

If EU legislators approve enabling legislation in 2026, the first operational test could commence in 2027. Assuming successful results, the full rollout would follow in 2029, making the eurozone one of the world’s earliest adopters of a publicly available central bank digital currency.

Northern Hesitation and Conservative Pushback

Not all of Europe shares Italy’s enthusiasm. German banking institutions have sounded alarm bells, warning that a digital euro could erode their deposit bases and blur essential distinctions between central bank money and commercial banking services. This concern reflects a broader fear: that citizens might rapidly shift savings out of traditional banks into ECB-backed digital accounts during periods of financial stress.

Conservative lawmakers have also mounted resistance. Fernando Navarrete, a MEP from the conservative bloc, has advocated for a stripped-down version of the digital euro — one confined to offline retail transactions and explicitly prohibited from disrupting existing interbank settlement mechanisms. His position reflects skepticism about whether a radical redesign of the European financial system actually serves citizens better than incremental reforms to existing infrastructure.

The Broader Strategic Challenge

The debate over digital currency ultimately reveals Europe’s predicament: how to innovate and maintain global competitiveness without sacrificing the stability mechanisms that have underpinned financial confidence for decades.

The ECB views the digital euro as instrumental for strengthening European monetary independence and streamlining cross-border transactions in an increasingly digital world. Yet banking institutions worry about unintended consequences — potential runs on deposits, systemic instability, or loss of their role in money creation.

Italy’s stance represents an attempt to reconcile these tensions. By advocating for a twin system with gradual cost distribution, the country is proposing that Europe doesn’t have to choose between modernization and stability. Instead, both can coexist if the transition is managed carefully and responsibilities are shared appropriately.

With a 2026 legislative decision point approaching and 2029 as the potential go-live date, Europe’s financial establishment faces a critical juncture. The digital currency debate will ultimately determine whether the continent shapes the future of money — or becomes shaped by it.