Key Points
- ECB board member Piero Cipollone says the digital euro would reduce Europe’s reliance on non-European payment companies.
- A pilot using real transactions by ECB and national central bank staff will start in 2027.
- The digital euro could launch as early as 2029 if EU lawmakers approve the regulation this year.
- There will be limits on how much people can hold, but no limits on payments. Offline payments will also be possible.
- Banks will distribute the digital euro, and the ECB will not open accounts for individuals.
Piero Cipollone, a member of the European Central Bank’s Executive Board, has outlined how a digital euro would strengthen Europe’s payment sovereignty. His remarks came during an interview with Milano Finanza, an Italian financial publication, which the ECB published on October 24.
According to Cipollone, the payment infrastructure represents a critical component of European economic stability. “If the payment system stops working, the economy stops working,” he stated.
The Case for European Payment Sovereignty
Currently, citizens can only access central bank money through physical banknotes. Cipollone explained that a digital euro would extend this access to the digital realm, where traditional cash cannot function.
He cited Italy’s rapid digital transformation as evidence of this shift. The country saw online payments surge from just 6% of total transactions in 2019 to 24% by 2024.
Card networks dominate these digital transactions. Cipollone noted that two-thirds of card payments in the region flow through payment schemes headquartered outside Europe.
“In recent years Europe has learned that, for some essential services, we cannot rely only on third parties,” he explained. He drew parallels to energy and defense sectors without identifying particular payment companies.
He clarified that sovereignty doesn’t mean excluding foreign competitors. “It means having the power to choose,” he emphasized.
Cipollone also highlighted how smaller merchants face disproportionate costs. He said independent retailers can pay transaction fees up to four times what large corporations pay. Legal restrictions on fees built into the digital euro framework should help reduce these disparities, he explained.
Implementation Details and Launch Timeline
Each person will face a cap on their digital euro wallet balance. However, spending won’t be restricted, because transactions exceeding the wallet limit can automatically draw from a connected bank account.
The currency will function without internet connectivity. Users can complete transactions by tapping two devices together during power outages or in locations with poor network coverage.
Cipollone explained that offline transaction data would remain private between transacting parties, mirroring cash’s privacy characteristics. Citizens will access the digital euro through their existing bank applications or a universal Eurosystem application.
The ECB won’t establish direct customer accounts. Instead, commercial banks and other licensed intermediaries will handle distribution and customer service.
The underlying technology will rely exclusively on European-built infrastructure. Cipollone stressed that physical currency will remain available alongside its digital counterpart.
Real-world testing involving actual transactions by ECB employees and national central bank personnel will commence in 2027. Currently, 36 private sector participants, including seven Italian companies, are contributing to the preparatory work. The ECB is also recruiting e-commerce and mobile commerce platforms to participate.
The ECB Governing Council cannot authorize full deployment until European Union legislators complete their regulatory framework. Should lawmakers finalize the regulation within this year, the digital euro could become operational by 2029.
“We hope that the regulation will be adopted by the end of the year, enabling the ECB’s Governing Council to issue a formal decision on issuance,” Cipollone said.
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