Italian Prime Minister Mario Monti's technocrat government has introduced a €1,000 euro ceiling for all cash transactions.

It's an effort to curb under-the-counter payments in a country where dentists, masons and plumbers often offer discounts for bills settled in cash.

Tax evasion in Italy is worth an estimated €120 billion euro a year.

Italian banks are launching cheap current accounts for low-income households and pensioners as a government crackdown on tax evasion limits the amount of payments that can be made in cash.

An estimated 850,000 pensioners in Italy do not have a bank account according to the country's banking association.

The government's move - flagged some weeks ago and formally launched today - has caused an outcry among low-earning Italians who are now being forced to open a bank account to receive payments above the €1,000 limit.

At the request of the government, banks are now offering low-cost current accounts to pensioners with a monthly income of up to €1,500 euro and households with a gross annual income of roughly up to €23,000.

The initiative was presented today in Rome by Bank of Italy, Treasury, and Italian Banking Association officials (ABI). ABI estimates that 850,000 pensioners in Italy do not have a bank account.