Cipollone outlines digital euro benefits and implementation timeline
ECB Executive Board member Piero Cipollone clarified the central bank's rationale for a digital euro, highlighting its benefits for European citizens and businesses. He addressed concerns regarding market fragmentation, financial stability, and privacy in an interview with Cyprus News Agency.
Digital cash for a fragmented market
Piero Cipollone emphasized that the digital euro aims to provide a digital version of cash, preserving citizens' freedom to use central bank money for online payments.
He highlighted simplicity as a major advantage for citizens, allowing payments across Europe with a single instrument.
For small businesses, the digital euro is expected to significantly reduce the cost of accepting digital payments, as the ECB will not charge scheme fees.
Cipollone also pointed to the current market fragmentation, where consumers often need multiple solutions for different payment scenarios.
He stressed the importance of European strategic autonomy in payments, noting that almost 70 percent of card transactions are processed by non-European companies, which the digital euro seeks to address.
Legislative path and safeguards
The digital euro project is progressing on legislative and preparedness tracks.
Cipollone expects the European Parliament to vote on its position by May 2026, with final legislation potentially in place by year-end.
The ECB plans a pilot phase in 2027, aiming for issuance by mid-2029, if legislation is enacted.
Addressing bank concerns about deposit outflows, Cipollone highlighted safeguards: no remuneration for digital euro, a 'waterfall solution' for payments from bank accounts, and holding limits.
Only individuals, not merchants, will hold digital euros, a measure designed to prevent financial instability according to ECB simulations.
Privacy at the core
The emphasis on privacy and resilience as core design principles is a strategic move to build public trust.
While the technical solutions for online and offline privacy are robust, the success hinges on clear communication and public acceptance.
The interview also subtly reinforced the ECB's data-dependent approach, downplaying the euro's exchange rate as a direct policy driver.