Bank of Italy urges SEPA for tokenized payments to protect euro

Bank of Italy Deputy Governor Chiara Scotti urged European financial institutions on Monday in Rome to assess whether the Single Euro Payments Area can be extended to support tokenized payments. She described a tokenized SEPA as an “important area for reflection.”

Scotti said Europe’s existing SEPA framework offers scale, shared technical standards and interoperability that could be used for tokenized payments. Her remarks came at the Digital Assets and Monetary Policy Transmission workshop in Rome.

The Eurosystem is preparing a pilot called Pontes to link market distributed ledger platforms with TARGET Services and enable settlement in central bank money. The Pontes pilot is expected by the third quarter of 2026. The European Central Bank is also developing Appia, a roadmap for a tokenized financial ecosystem that is due to conclude in 2028 and will examine how tokenized deposits, stablecoins and central bank money should coexist.

European authorities have flagged risks from widespread use of non-euro stablecoins. In a November 2025 report, the ECB said heavy stablecoin adoption could reduce demand for the euro, create dependence on foreign settlement assets and lead households to shift some holdings from bank deposits to stablecoins, producing retail deposit outflows.

A working paper published on March 4, 2026 highlighted a potential “deposit-substitution mechanism,” where funds move from retail bank deposits into digital assets. On March 23, ECB Executive Board member Piero Cipollone told officials that tokenized deposits and stablecoins need tokenized central bank money to serve as a public settlement anchor if a tokenized financial system is to scale.

Officials view bringing central bank money onto distributed ledgers as a way to preserve a euro-denominated settlement anchor while allowing transactions on private platforms. Pontes aims to enable settlement in central bank money for transactions initiated on market DLT platforms by connecting them to TARGET Services. Appia will consider legal and operational questions about settlement finality, interoperability and access, and set out longer-term rules and standards for a tokenized ecosystem.

Scotti’s appeal adds to an ongoing policy discussion in Europe. Regulators and market participants are evaluating technical designs, regulatory safeguards and market arrangements to allow tokenized instruments to operate alongside traditional bank deposits and central bank money.