The European Central Bank has set out a detailed case for the digital euro as lawmakers in Brussels move toward a political agreement on its legal framework. In an introductory statement to the European Parliament economic committee on 17 November, Executive Board member Piero Cipollone said the project is advancing on both the legislative and technical fronts. The full speech is available on the ECB website.
He noted that the Council aims to agree its position before the end of the year and that Parliament is shaping its negotiating mandate. Euro area leaders also confirmed the strategic importance of the digital euro during the October Euro Summit, calling for faster progress on the remaining preparatory steps.
Extending cash into the digital world
Cipollone said the digital euro is needed to extend the qualities of cash into digital payments. Cash remains widely accepted, inclusive and privacy protecting, yet it cannot be used for online transactions. With digital payments representing more than one third of day to day purchases, he said the lack of a public digital option limits consumer choice and weakens merchants’ bargaining position.
He stressed that Europe still relies heavily on non European providers. In 15 of the 20 euro area countries, there is no domestic solution with significant usage for digital payments in shops, and more than half lack a widely accepted domestic solution for e commerce. He said this dependence leaves Europe exposed to external decisions, adding that a digital euro built on European infrastructure would strengthen resilience and autonomy.
Safeguarding banks
Addressing concerns from the banking sector, Cipollone said the digital euro is designed to preserve banks’ role in the financial system. It will be distributed through banks, digital euro holdings will not be remunerated and caps will be applied to limit the risk of deposit outflows. A link to commercial bank accounts will allow users to pay and receive funds seamlessly, even for large amounts.
He said banks could benefit from lower costs because the Eurosystem will not charge scheme or settlement fees. Savings would be shared across banks and merchants, improving their ability to negotiate with international card schemes. He added that European payment initiatives would be able to use the new standards to expand more easily across the region.
Investment costs for banks are expected to be modest compared with their annual IT budgets and lower than earlier regulatory projects such as SEPA.
Cash will continue
Cipollone said the digital euro will complement, not replace, physical cash. The ECB is working on the third series of euro banknotes, and the institution continues to support measures that strengthen the legal tender status of cash. People will remain free to choose how they pay.
Privacy protections
He said the digital euro will protect privacy and personal freedom. Offline payments would offer cash like privacy with transaction details known only to payer and payee. Online transactions would be pseudonymised and encrypted, with no access for the ECB to personal identifying data.
Independent data protection authorities will supervise compliance with EU rules. Banks would continue to carry out checks for fraud, money laundering and terrorism financing. Cipollone also reiterated that the digital euro will not be programmable, meaning there will be no restrictions on where or how it can be used.
Next steps
He said the success of the project depends on a strong legal framework, including mandatory distribution and legal tender status. If EU lawmakers adopt the regulation next year, a pilot phase could begin in 2027 and the digital euro could be ready for first issuance in 2029.
Cipollone described the project as a collective step forward to ensure that central bank money continues to serve citizens, businesses and the wider European economy in a digital era.