The European Central Bank is increasingly framing the digital euro and tokenised central bank money as core pillars of Europe’s economic resilience, rather than niche payments experiments. That message came through clearly on Monday, when Christine Lagarde used her annual address to the European Parliament to link digital money directly to competitiveness, sovereignty and financial stability.
In a wide-ranging speech marking the ECB’s Annual Report, Lagarde devoted a substantial section to the future of central bank money. Her remarks went well beyond familiar assurances about privacy or consumer choice. Instead, she placed the digital euro, alongside new initiatives on tokenised money, within a broader strategy to reduce Europe’s dependence on non-European payment infrastructures and to support the next phase of financial market innovation.
Digital euro as a strategic complement to cash
Lagarde reaffirmed the ECB’s dual-track approach: preserving cash as legal tender while preparing a digital equivalent for an economy where physical money is used less frequently. Cash, she stressed, must remain available and accessible, supported by a proposed EU regulation and a future redesign of euro banknotes.
But cash alone is no longer sufficient in a digital economy. The digital euro, she said, would ensure that central bank money remains usable for everyday digital payments across the euro area. Lagarde again highlighted key design principles, including offline payments with cash-like privacy and strict limits on the ECB’s access to personal data.
For businesses, particularly smaller merchants, she argued that a digital euro could reduce fees and rebalance a payments market dominated by a small number of global players. Just as importantly, it would be built on a fully European infrastructure, addressing what the ECB increasingly describes as a strategic dependency risk.
Lagarde explicitly called on the European Parliament, as co-legislator, to make “decisive progress” on the digital euro Regulation, underlining that the project now sits squarely in the political arena.
Tokenised central bank money moves closer to market
Alongside the retail digital euro, Lagarde devoted notable attention to tokenised central bank money for wholesale and market use. This strand of work has gained momentum over the past year as financial institutions experiment with tokenised bonds, funds and other assets.
The ECB’s first ambition is practical and near-term. Through Project Pontes, the Eurosystem aims to enable the settlement of DLT-based wholesale transactions in central bank money. Lagarde confirmed that a market-ready solution is expected in the third quarter of this year, a timeline that suggests growing confidence inside the ECB.
The second ambition is more structural. Project Appia is intended to help create an integrated European market for digital assets from the outset, rather than allowing fragmentation along national or technological lines. The goal, Lagarde said, is to ensure that Europe’s tokenised finance ecosystem is anchored in a risk-free, euro-denominated asset.
Together, Pontes and Appia point to a future in which central bank money underpins tokenisation, rather than standing apart from it.
Why it matters
By placing the digital euro and tokenised money within a narrative of resilience and competitiveness, Lagarde is signalling a shift in emphasis. These projects are no longer framed mainly as responses to crypto-assets or Big Tech. They are being positioned as foundational infrastructure for Europe’s economic sovereignty.
That framing raises the stakes for lawmakers. Delays or political deadlock on the digital euro Regulation now risk being seen not just as technical caution, but as a strategic failure. For markets, the clearer timelines around Pontes and the ambition behind Appia suggest the ECB wants to shape tokenisation on its own terms, before private solutions define the standards.
As Lagarde concluded, economic power is increasingly exercised through finance and technology. In that context, the future of central bank money is becoming a central question for Europe’s place in the global economy.