Cipollone: Digital euro key to Europe's payment autonomy

ECB's Cipollone detailed how reliance on non-European financial infrastructure creates vulnerability through three mechanisms: disconnection, extraterritorial reach, and dominant market power.

Disconnection risks outright access withdrawal, while extraterritorial reach allows foreign legal frameworks to propagate.

Dominant providers unilaterally set terms and fees, making European entities rule-takers.

Two-thirds of euro area card transactions are governed by non-European companies, with many countries entirely dependent on international card schemes for in-store payments.

This has led to merchant service charges almost doubling between 2018 and 2022, despite regulatory efforts.

Smaller retailers face disproportionately higher charges, increasing consumer prices.

As digital transactions grow, Europe's reliance on non-European payment infrastructure intensifies.

Cash, the only form of public money, is unavailable for e-commerce, which now comprises over a third of retail sales by value.

Cash use has rapidly declined from 68% of daily transactions in 2019 to 40% in 2025, highlighting this structural gap.

The digital euro is the Eurosystem's response to Europe's payment gap, designed as digital cash and legal tender, available online and offline.

It directly addresses three vulnerabilities.

First, it reduces dependence on non-European providers through a fully European infrastructure and rules, enhancing economic security by using only EU-registered providers.

Second, its distributed infrastructure and offline functionality ensure payment continuity even during outages or without internet, leveraging Baltic cyber defence expertise.

Third, it mitigates market power by eliminating scheme or processing fees, lowering merchant costs.

Its open standards will enable European payment companies to compete and innovate at scale, fostering public-private partnership.