Bank of Italy Deputy Governor Chiara Scotti has called for the European Union to explore integrating tokenization into the Single Euro Payments Area (SEPA), the system that processed €116 trillion in non-cash transactions in the first half of 2025.
"European authorities must look beyond creating entirely new payment mechanisms," Scotti said at a conference in Rome, emphasizing that policymakers should instead investigate adapting current infrastructure to accommodate tokenized transaction settlement.
The proposal comes as the European Central Bank advances its own digital euro initiative and grapples with the rise of alternative digital money formats, including e-money instruments and tokenized commercial bank deposits. SEPA provides a unified architecture for non-cash euro transactions across 36 member states, and upgrading this existing network could significantly accelerate the evolution of digital finance in the region.
This initiative represents a potential turning point for digital assets in Europe, creating a formal path for integrating tokenized money within the established, centrally-overseen financial system. The move could provide a regulated framework for stablecoins and wholesale central bank digital currencies (CBDCs), addressing risks like deposit substitution that the ECB has previously highlighted while still fostering innovation.
Scotti’s proposal focuses on evolution rather than revolution. By leveraging SEPA's existing reach and regulatory framework, European authorities could create a standardized settlement layer for both sovereign and private digital money. This approach contrasts with building entirely new systems from scratch and acknowledges the deep integration of the current dual-layer monetary architecture, which combines central bank reserves with commercial banking deposits.
The push for modernization is part of a global trend. In the United States, the Federal Reserve's FedNow service has accelerated the shift to instant payments, while networks in Singapore (FAST) and India (UPI) have been foundational for years. The Bank of Italy's proposal seeks to ensure Europe's payment infrastructure remains competitive and independent, a strategic goal reinforced by the ECB's recent partnerships to test digital euro-compatible payment infrastructure.
The call for tokenized SEPA payments aligns with broader European efforts to create a clear regulatory environment for digital assets, most notably through the Markets in Crypto-Assets (MiCA) regulation. While the ECB has expressed concerns that widespread stablecoin adoption could lead to significant bank deposit outflows, integrating tokenized assets into SEPA under central bank oversight could be a way to mitigate these risks.
Piero Cipollone, a member of the ECB’s Executive Board, recently stated that both tokenized deposits and stablecoins need tokenized central bank money as a public settlement anchor. Scotti's proposal provides a concrete vision for what that anchor could look like, potentially paving the way for regulated stablecoins and wholesale CBDCs to play a significant role in Europe's financial future.
This article is for informational purposes only and does not constitute investment advice.
