The European Central Bank has detailed its strategy to modernise central bank money in response to rapid digitalisation and rising geopolitical fragmentation. In a presentation delivered on 24 November 2025, Executive Board member Piero Cipollone outlined how the Eurosystem aims to prepare for a potential digital euro, support Distributed Ledger Technology (DLT) based wholesale settlement, and improve cross-border payment links.
According to the speech, digitalisation is reducing the use of cash across Europe and increasing reliance on non European payment providers. The ECB warns that, without action, the euro area risks deeper fragmentation in retail payments and new vulnerabilities tied to foreign technology platforms. A slide on page 2 of the document highlights growing tokenisation and the possible reintroduction of credit risk if new privately issued settlement assets proliferate.
Digital euro preparations
The ECB says it is laying the technical foundations for a potential digital euro. The presentation states that a pilot exercise and initial transactions could begin in mid 2027, assuming the European co legislators adopt the digital euro regulation in 2026. The Eurosystem aims to be ready for a first issuance during 2029.
The current phase focuses on technical readiness, market engagement and support for the legislative process. The ECB is working with payment providers and merchants to finalise the rulebook, while conducting user research to refine design features. Page 4 stresses that the digital euro is intended to provide everyday convenience, pan European reach and greater strategic autonomy through European governance and infrastructure.
Wholesale settlement and DLT
The presentation also highlights exploratory work on distributed ledger technology. The ECB sees potential efficiency gains from 24/7 settlement, integrated trading and custody, and the use of smart contracts. A shared DLT platform could lower barriers to capital markets access for smaller firms. These findings point toward the creation of what the ECB calls a digital capital markets union.
The Pontes project will begin linking DLT platforms with TARGET Services from Q3 2026, offering settlement in central bank money. The longer term Appia project aims to develop a more integrated European payments and securities ecosystem, designed to operate safely at global scale.
Cross border interlinking
The ECB also plans to expand multi currency settlement through TARGET Instant Payment Settlement (TIPS), enabling instant end to end transfers in participating currencies. According to page 8, Europe will pursue cross currency settlement services for international payments and expand bilateral connections, including with India and Switzerland, as well as participate in multilateral frameworks such as Nexus.
These initiatives support the G20 objective of making cross border payments cheaper, faster and more transparent. For the ECB, they form part of a broader effort to strengthen the euro’s international role while enhancing the resilience of European financial infrastructure.
Taken together, the strategy presented by Cipollone reflects a coordinated push to modernise central bank money, safeguard monetary sovereignty and support innovation without compromising safety. The digital euro, DLT exploration and global payment links are now central elements of Europe’s response to the technological transformation of finance.