The European Central Bank has sharpened its case for the digital euro, framing it as a strategic response to Europe’s growing dependence on foreign payment providers. Speaking in Rome on 19 February, ECB Executive Board member Piero Cipollone told Italy’s Parliamentary Committee of Inquiry into the Banking, Financial and Insurance System that retail payments have become a pressure point for Europe’s monetary sovereignty.
His message was clear: as cash use declines and digital transactions increasingly rely on non-European platforms, the euro risks losing ground in its own economy unless policymakers act.
“In this fast-changing world, let’s show Europeans that we respond to challenges head-on,” Cipollone said, urging lawmakers to move swiftly on digital euro legislation.
Retail Payments at the Core
Cipollone stressed that while the ECB continues to modernise wholesale payments and cross-border settlement infrastructure, the most immediate vulnerability lies in retail payments.
Two-thirds of card-based transactions in the euro area are processed by non-European companies, he said, and 13 euro area countries depend entirely on international card schemes. Even countries such as Italy, which have domestic e-commerce solutions, are seeing their market share erode.
At the same time, consumer behaviour is shifting rapidly. According to ECB data cited in the speech, online payments in Italy rose from around 6 percent in 2019 to 24 percent in 2024. Across the euro area, online shopping now accounts for more than one-third of retail transactions, yet cash cannot be used online.
This, Cipollone argued, creates a structural gap: Europe’s economy is digital, but central bank money remains largely physical in retail use.
The digital euro is intended to close that gap by providing what he described as “digital cash”, a public means of payment available both online and offline, complementing rather than replacing banknotes.
Sovereignty, Not Protectionism
The speech marked a noticeable shift in tone. Cipollone repeatedly linked the digital euro to strategic autonomy, resilience and geopolitical uncertainty.
Payment systems, he said, now form part of Europe’s critical infrastructure, alongside energy and telecommunications. Dependence on foreign-controlled systems creates vulnerabilities that Europe “cannot afford to ignore”.
He also pointed to the rapid growth of US dollar-denominated stablecoins as a potential long-term risk to euro-denominated commercial bank money, particularly in cross-border contexts.
The digital euro, built on European infrastructure and backed by legal tender status, would allow Europe to “regain ownership of the rails” on which its payment system runs, he argued.
Addressing Privacy and Bank Concerns
Cipollone sought to reassure lawmakers on two sensitive fronts: privacy and financial stability.
Offline digital euro transactions would be known only to payer and payee, while online payments would appear to the ECB as encrypted codes, with identities known only to banks. Holdings would not be remunerated and would be subject to limits, designed to prevent large-scale deposit outflows from commercial banks.
Distribution would take place through banks and supervised intermediaries, which would remain the primary interface for users.
In fact, Cipollone suggested banks stand to gain. Unlike current arrangements with international card schemes and big tech wallets, the Eurosystem would not charge scheme or settlement fees, potentially creating cost savings to be shared across the ecosystem.
Merchant Economics and Legislative Urgency
Merchants featured prominently in the speech. Cipollone noted that small businesses can pay up to four times more for card payments than larger retailers. Under the digital euro model, he said, small merchants could expect to pay roughly half of what they currently pay for digital transactions.
The ECB has already begun preparing technically for a possible issuance decision and plans to publish a call for interest for payment service providers to participate in pilot exercises.
On the political front, Cipollone welcomed the Council of the European Union’s agreement on its negotiating position on the proposed digital euro regulation. The European Parliament is expected to adopt its position in May.
He warned that delays risk entrenching Europe’s dependence on international card schemes and non-European big tech solutions.
European leaders, he reminded lawmakers, called last October for “swiftly completing legislative work and accelerating other preparatory steps” for the digital euro.
The ECB’s message is increasingly unmistakable: the digital euro is no longer presented as a technical experiment. It is being positioned as a strategic layer of Europe’s financial infrastructure, one that will shape the balance between public money, private innovation and geopolitical resilience in the years ahead.
Related: EU Council Agrees Digital Euro Position and Stronger Cash Protection