The European Central Bank is pressing ahead with plans for a digital euro to preserve access to central bank money in an increasingly digital economy and to reduce Europe’s reliance on non-European payment providers, according to ECB Executive Board member Piero Cipollone in an interview with the Cyprus News Agency.
Cipollone stressed that no digital euro will be issued until the necessary EU legislation is in place, but described it as a “digital version of cash” that would allow citizens to use central bank money for online and digital payments. He said the main benefits for consumers would be simplicity and universal acceptance across the euro area, including the ability to make offline payments without an internet connection.
For businesses, particularly small merchants, the digital euro would significantly lower payment costs, as the ECB would not charge scheme fees. Cipollone said this would be especially beneficial for economies such as Cyprus, where small businesses face relatively high costs when accepting international card payments.
He argued that a central bank digital currency is needed despite the widespread use of private mobile wallets, citing fragmentation in the current payment landscape and Europe’s dependence on non-European card schemes, which process nearly 70% of card-initiated transactions. The digital euro, he said, would strengthen Europe’s resilience and strategic autonomy in payments.
On timing, Cipollone said EU legislation could be finalised by the end of 2026, with a pilot phase expected to begin in 2027. If approved, the ECB aims to be ready to issue the digital euro by mid-2029.
Addressing banks’ concerns about potential deposit outflows, he said the ECB has built in safeguards to protect financial stability. These include the digital euro being non-remunerated, holding limits for individuals, a “waterfall” mechanism that allows payments to be made directly from bank accounts without prefunding, and restricting access to natural persons rather than merchants. ECB analysis, he said, shows no threat to financial stability even under relatively high holding limits.
Cipollone also emphasised privacy protections, saying the system has been designed so that the ECB will not see personal transaction data. For online payments, transaction details would remain with banks, while offline payments would offer cash-like privacy, with only the payer and payee aware of the transaction.
On monetary policy, Cipollone said the ECB does not target the exchange rate, although movements in the euro are taken into account in inflation projections. He noted that the euro’s recent appreciation against the dollar remains within levels seen over the past year.
