FRANKFURT — A digital euro would require European banks to spend between €4 billion and €6 billion over the next four years on system upgrades, ECB board member Piero Cipollone told an Italian parliamentary committee.

Banks provided the cost estimates, Cipollone said. That amount matches roughly 3% of what lenders devote each year to IT maintenance.

The European Central Bank pegs its own startup expenses for the digital currency at €1.3 billion. Operational costs would run about €300 million afterward, though officials did not say if that covers one year or more.

ECB officials await EU legislation to greenlight the digital euro. They call the project essential to preserve public money’s role as economies go digital. The currency would also knit together Europe’s patchwork payments systems and cut dependence on providers outside the bloc.

Banks can recoup their outlays, Cipollone said. They would charge merchants fees for handling digital euro payments through apps on consumer smartphones. Unlike typical setups, banks would dodge network fees. The ECB intends to run its infrastructure free of charge.

Merchants stand to gain as well. The central bank aims to limit digital euro fees below rates from card giants Visa and Mastercard.

For now, the ECB picks banks to test the system. A full rollout could arrive by 2029 if lawmakers approve. That timeline advances Europe’s drive for homegrown digital payments.

Cipollone laid out these details during his appearance before Italian lawmakers. The comments highlight concrete financial stakes as the ECB nears a decision on the euro’s electronic twin.

Supporters argue the digital euro bolsters monetary sovereignty. Private stablecoins and foreign tech firms have grabbed chunks of Europe’s payments turf. A central bank version would let citizens hold euros directly from the ECB, outside commercial bank accounts.

Critics worry it could pull deposits from banks and disrupt lending. ECB studies counter that risk remains low if users stick to small holdings for daily use.

Preparations ramp up. The ECB launched an investigation phase in 2021. Technical trials followed in late 2023. Pilot tests with select banks come next.

EU lawmakers debate the legal framework. Negotiations drag on details like privacy rules and fee caps. Approval could land next year.

Other major economies eye similar moves. The U.S. Federal Reserve weighs a digital dollar. China’s e-CNY already processes billions in transactions.

Europe moves deliberately. Cipollone stressed banks’ input shaped the cost math. Lenders called for clear rules on fee recovery and no infrastructure charges from the ECB.

The digital euro targets everyday payments. Users would load wallets via bank apps or ATMs. Offline use would work too, for spotty internet zones.

No final go-ahead yet. The ECB governing council votes after EU law passes. That step unlocks pilots and sets 2029 as the target launch.