Bank of Italy Urges EU to Explore Tokenized SEPA Payments

The Bank of Italy’s Deputy Governor, Chiara Scotti, has urged European policymakers to evaluate extending the Single Euro Payments Area (SEPA) into tokenized payments. Speaking at the Digital Assets and Monetary Policy Transmission workshop in Rome on May 4, Scotti highlighted SEPA’s existing advantages—scale, shared standards, and interoperability—as a potential foundation for a tokenized financial future.

SEPA, launched in 2008, simplifies euro-denominated payments across 36 countries, making cross-border transactions as seamless as domestic ones. It is a cornerstone of European financial integration, supporting efficiency, cost reduction, and regulatory oversight. However, Scotti’s comments suggest that as digital finance evolves, SEPA must adapt to ensure the euro remains central in this space.

DLT Pilots and Monetary Sovereignty

The Eurosystem is already testing distributed ledger technology (DLT) for settlement. A pilot for the Pontes project—designed to connect market DLT platforms with TARGET Services for real-time settlement in central bank money—is slated for Q3 2026. Additionally, the European Central Bank (ECB) is developing Appia, a roadmap for integrating tokenized deposits, stablecoins, and central bank money within Europe’s financial ecosystem, with a timeline extending to 2028.

These initiatives aim to address growing concerns over the rise of non-euro stablecoins, which the ECB warns could undermine Europe’s monetary sovereignty. In a March 2026 working paper, the ECB highlighted risks such as a “deposit-substitution mechanism,” where households replace traditional bank deposits with stablecoin holdings. This could destabilize bank funding models, as stablecoins lack the regulatory and consumer protection frameworks governing SEPA transactions.

Strategic Importance of Tokenized SEPA

Tokenizing SEPA could counter these risks by offering a euro-centric alternative to private stablecoins. SEPA’s existing infrastructure—particularly schemes like SEPA Instant Credit Transfer (SCT Inst), which enables near-instant euro transfers—provides a strong starting point for scaling tokenized payments. This would enhance the euro’s competitiveness in digital finance while maintaining the regulatory oversight SEPA is known for.

However, integrating tokenization into SEPA poses challenges. Policymakers will need to ensure interoperability with existing systems, address cybersecurity concerns, and align any new frameworks with evolving European regulations like the Markets in Crypto-Assets (MiCA) framework.

Outlook

The ECB’s ongoing experiments with DLT and tokenized money signal a clear intent: Europe is preparing for a digital financial system where traditional and tokenized assets coexist. The next key milestone will be the Pontes pilot in late 2026, which could set the stage for broader adoption. Meanwhile, the Bank of Italy’s call to action underscores the urgency of aligning SEPA with this digital transition. For traders and market participants, these developments could reshape liquidity flows and settlement mechanisms across Europe, with significant implications for euro-denominated assets.

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