Cipollone: ECB modernizes money for digital retail, wholesale

Piero Cipollone, Member of the Executive Board of the ECB, emphasized that central bank money must evolve with technology to remain stable and relevant.

He outlined three key challenges for the euro area's monetary and payment systems.

First, for retail payments, there is no consistent European digital solution, leading to heavy reliance on non-European providers and associated risks.

Second, wholesale markets face potential fragmentation if central bank money does not adapt to tokenisation and Distributed Ledger Technology (DLT), which promise efficiency but require a stable settlement asset.

Third, cross-border payments remain slow, costly, and opaque, a significant concern for the euro area's open economy.

Cipollone stressed that resisting digitalisation is not an option; instead, central bank money must extend into this new environment while preserving safety, uniformity, and reliability.

The ECB addresses these challenges with a three-pillar payment strategy.

It is preparing for a digital euro, a digital cash equivalent for retail use, complementing existing options and ensuring a public digital payment choice across the euro area.

DLT-based transactions will also be settled in central bank money via TARGET services from September 2026, providing risk-free settlement for tokenised assets.

Lastly, the ECB is interlinking fast payment systems globally to enhance cross-border transactions, leveraging existing infrastructures and safeguarding monetary sovereignty.

This ensures public money anchors the financial system as technology evolves.