Cipollone: Digital euro, tokenisation reshape payments
ECB Executive Board member Piero Cipollone outlined the central bank's comprehensive strategy for the digital transformation of money, payments, and finance. He detailed initiatives including the digital euro, tokenised central bank money, and cross-border payment improvements.
A new era for retail payments
The nature of payments is undergoing a profound digital transformation, driven by new technologies like distributed ledger technology (DLT) and a focus on resilience.
The ECB's comprehensive strategy aims to foster an integrated, innovative, and competitive European payments market.
A key component is the digital euro, envisioned as a digital form of cash for retail payments, available across the euro area both online and offline.
It would complement physical cash, offering freedom of choice.
EU-licensed payment service providers (PSPs), particularly banks, are central to its distribution, preserving customer relationships and receiving fair compensation.
The digital euro will establish a European acceptance infrastructure, setting open standards for private innovation.
The investigation phase concluded in October 2023, with the current preparation phase focusing on technical readiness and legislative support.
A pilot is planned for the second half of 2027, with potential issuance during 2029, pending EU co-legislators' adoption of the digital euro Regulation.
Wholesale innovation and global links
Beyond retail, the Eurosystem is advancing new ways of supplying central bank money for wholesale digital transactions through tokenisation.
Projects Pontes and Appia are central to this effort.
Pontes provides a bridge between DLT platforms and TARGET Services, enabling DLT transactions to be settled in central bank money, with a launch scheduled for September 2026.
Appia supports the development of an integrated tokenised ecosystem in a public-private partnership, with a blueprint expected in 2028.
These initiatives aim to deliver efficiency and innovation by addressing the fragmentation of current capital markets.
Furthermore, the ECB is committed to improving global cross-border payments, exploring interlinking TIPS with fast payment systems outside Europe (e.g., India, Switzerland, Brazil) and participating in Project Agorá, a BIS-led public-private collaboration to test a multi-currency shared platform.
Ambitious vision, complex path ahead
Cipollone's speech paints a clear, ambitious roadmap for the future of European payments, balancing innovation with stability.
However, the sheer breadth of initiatives, from retail digital euro to wholesale tokenisation and cross-border efforts, presents significant coordination and implementation challenges.
Success will hinge on seamless public-private collaboration and robust legislative support to navigate this complex transformation.