The digital euro is essential to strengthening Europe’s payment sovereignty as cash use declines and digital payments become dominant, ECB Executive Board member Piero Cipollone said in a speech in Nicosia.
Speaking at an event on the digital euro in Cyprus, Cipollone warned that Europe is increasingly dependent on non-European payment providers, with nearly two-thirds of card-based transactions in the euro area processed by foreign companies. In several euro area countries, including Cyprus, in-store card payments rely entirely on international card schemes, creating vulnerabilities in what he described as critical economic infrastructure.
Cipollone said the digital euro would serve as a digital complement to cash, ensuring that central bank money remains available in an increasingly digital economy. While banknotes will continue to be issued, the ECB must adapt to changing payment habits by offering a public, sovereign digital means of payment with legal tender status.
He stressed that the digital euro would not amount to protectionism but would instead support Europe’s strategic autonomy, resilience and competitiveness. Built on European infrastructure, it would allow Europe to regain control over the “rails” of its payment system and reduce reliance on foreign technologies, including international card schemes and US dollar-denominated stablecoins.
For consumers, Cipollone said the digital euro would provide a simple, universally accepted payment option usable across the euro area, both online and offline. Offline functionality would allow payments without an internet connection and offer a level of privacy comparable to cash. For online transactions, the ECB and national central banks would not have access to personal transaction data, which would remain with banks.
Merchants, particularly small businesses, would benefit from lower and more transparent payment costs. Cipollone said small merchants in Cyprus currently pay up to four times more for card payments than large retailers. With the digital euro, their payment costs could fall to around half of current levels, while the existence of a European alternative would strengthen merchants’ bargaining power with private payment providers.
Banks would remain central to the system, as the digital euro would be distributed through supervised intermediaries. Holdings would be non-remunerated and subject to limits to prevent excessive deposit outflows, safeguarding financial stability. Cipollone said ECB assessments show that using the digital euro for everyday payments would not pose risks to the banking system.
He emphasised that the digital euro is being developed as a public-private partnership. Its legal tender status would establish a common European payment standard on which private providers could innovate, scale up more easily across borders and integrate the digital euro into existing wallets and cards.
On progress, Cipollone welcomed the Council of the EU’s agreement on its negotiating position for the digital euro regulation, calling it a decisive step forward. The European Parliament is expected to reach its position in May. On the technical side, the ECB is continuing preparations and will soon invite payment service providers to participate in pilot exercises.
Cipollone concluded that swift adoption of the digital euro legislation is increasingly urgent to avoid further entrenching Europe’s dependence on international card schemes, big tech payment solutions and stablecoins, and to preserve Europeans’ freedom to pay with sovereign money in both physical and digital form.
(ecb.europa.eu)
