A senior official from the Bank of Italy has advocated for the European Union to consider the development of a tokenized version of its existing Single Euro Payments Area (SEPA) system, citing the growing relevance of tokenization in financial markets.
Chiara Scotti, Deputy Governor of the Bank of Italy, suggested during a recent address in Rome that a “complementary strategy” should be developed to address evolving technological landscapes. She emphasized the need to examine how current European payment frameworks can be adapted to incorporate tokenization, rather than focusing solely on new digital instruments.
Scotti proposed that a tokenized extension of SEPA could represent a significant area for regulatory and technological exploration. She highlighted SEPA’s existing strengths, including its common framework, scale, shared standards, and established interoperability, as a solid foundation upon which to build. According to Scotti, such an evolution could help align the established principles of a two-tier monetary system with emerging technological environments.
- Tokenization Integration: The Bank of Italy supports exploring a tokenized version of the SEPA system.
- Adapting Existing Frameworks: Emphasis is placed on evolving current payment systems rather than solely developing new instruments.
- Leveraging SEPA Strengths: The proposal aims to build upon SEPA’s established infrastructure, standards, and interoperability.
- Monetary System Evolution: A tokenized SEPA could help adapt the traditional monetary system to new technological contexts.
- Digital Euro Focus: The digital euro is identified as the most advanced area of analysis regarding central bank digital currencies.
SEPA currently facilitates cashless euro transactions across the EU and certain non-EU countries. The total value of non-cash payment transactions, including those processed via SEPA, reached €116 trillion in the first half of 2025, reflecting a 2.9% year-on-year increase, according to European Central Bank data.
Potential Regulatory Precedent
The suggestion by the Bank of Italy to explore a tokenized SEPA framework could set a significant regulatory precedent within the European Union. By proposing an adaptation of an existing, widely used payment system, it signals a potential shift towards integrating decentralized technologies within established financial infrastructures. This approach contrasts with the creation of entirely new systems and suggests a pathway for regulated entities to engage with tokenization under existing supervisory oversight. The successful implementation of such a system could influence other jurisdictions considering similar integrations, potentially leading to a more harmonized global approach to tokenized financial services built upon existing rails.
Digital Euro Developments
Scotti also commented on the progress of the digital euro, which she identified as the area with the most advanced analytical work. She noted that the implications of a digital euro have been extensively studied across various public policy dimensions, including monetary policy, financial stability, intermediation, payment efficiency, privacy, financial inclusion, and its interaction with private sector solutions. In contrast, the broader systemic implications of other digital assets, such as stablecoins and tokenized deposits, remain less clear, despite their potential legitimate use cases.
The European Central Bank (ECB) and the Eurosystem are actively continuing their trials for the digital euro. Earlier this month, the ECB formalized agreements with three key standard-setting organizations – European Card Payment Cooperation, Nexo Standards, and Berlin Group – to conduct pilot testing for online payment processing capabilities of the digital euro.
Details can be found on the website : www.theblock.co