The European Central Bank must modernise money to remain the anchor of trust in a rapidly digitalising financial system, according to Piero Cipollone, a member of the ECB Executive Board. Speaking in Rome, Cipollone said the digital euro, tokenised central bank money and faster cross-border payments are essential to preserve Europe’s monetary sovereignty and payment autonomy.
In a speech at a roundtable hosted by Aspen Institute Italia, Cipollone argued that doing nothing is not an option for central banks. As payments become digital and financial services increasingly depend on new technologies, central bank money risks becoming marginal unless it evolves alongside the private sector.
Cipollone stressed that the ECB’s mandate remains unchanged, to issue money and protect its value. What is changing, he said, is the technological environment in which that mandate is delivered, requiring the Eurosystem to take a more active role in shaping the future of money.
Three challenges facing Europe’s payments system
Cipollone identified three structural problems confronting the euro area. First, retail payments remain fragmented, with Europe still lacking a pan-European solution for everyday point-of-sale and online payments. This has left consumers and merchants heavily reliant on non-European card schemes and wallets, raising concerns about strategic autonomy.
Second, the rise of tokenisation and distributed ledger technology is transforming capital markets. Without tokenised central bank money at their core, Cipollone warned, new digital asset ecosystems could rely on fragmented private settlement assets, reintroducing credit risk and weakening the euro’s role as the anchor of stability.
Third, cross-border payments remain slow, expensive and opaque. While stablecoins offer one possible alternative, Cipollone cautioned that their growth, particularly dollar-denominated stablecoins, could undermine domestic currencies and erode the international role of the euro.
Digital euro pilots from 2027, issuance targeted for 2029
Against this backdrop, Cipollone outlined a three-part Eurosystem strategy. The first pillar is the potential issuance of a digital euro, described as a digital form of cash that would be legal tender across the euro area.
Assuming EU legislators adopt the digital euro regulation next year, Cipollone said pilot exercises and initial transactions could begin in mid-2027, with the digital euro ready for first issuance in 2029. The digital euro would work both online and offline, support privacy, and complement physical cash rather than replace it.
Banks would distribute the digital euro, manage customer relationships and be compensated for their role. Safeguards such as holding limits and non-remuneration are designed to prevent destabilising outflows from bank deposits and protect monetary transmission.
Tokenised central bank money and cross-border links
The second pillar focuses on wholesale markets. From next year, the ECB plans to enable settlement of distributed ledger technology transactions in central bank money. Cipollone said this is critical for scaling up tokenised securities and building an integrated European digital asset market.
Projects known as Pontes and Appia aim to connect market DLT platforms to existing TARGET services and explore shared or interoperable European-ledgers for digital assets. The goal is to ensure that Europe’s digital capital markets develop on euro-denominated, EU-governed infrastructure.
The third pillar targets cross-border payments. Cipollone said the ECB wants to interlink its instant payment system with those of other countries, starting with partners such as India. Over time, systems like TIPS could evolve into global hubs for instant cross-border settlement, reducing costs and intermediaries while preserving monetary autonomy.
A public-private partnership for the future of money
Throughout the speech, Cipollone emphasised that central bank money and private money are complements, not competitors. Central bank money provides the risk-free settlement asset that allows private innovation to scale safely.
“The choice before us is simple,” he concluded. Europe can either watch the future of money being shaped elsewhere, or help design it itself. Acting now, in partnership with the private sector, would allow Europe to build a resilient digital financial system with the euro at its core.