Speech by Piero Cipollone, Member of the Govt Board of the ECB, MNI Join Webcast
Frankfurt am Primary, 6 October 2026
For hundreds of years, issuing cash and safeguarding its worth has been on the coronary heart of central banks’ mandate.
However the technological atmosphere is altering.
Individuals more and more pay digitally. Monetary establishments are experimenting with distributed ledger expertise (DLT). Belongings are being represented as digital information, or tokens. New actors have entered markets historically served by banks.
This transformation opens up vital alternatives.
It could actually make funds extra handy and finance extra environment friendly. And it could possibly pave the way in which for brand spanking new merchandise and enterprise fashions.
However it additionally creates dangers.
If we don’t present a digital type of money, the function of public cash might proceed to say no. And we might discover ourselves trapped in a scenario the place there isn’t any pan-European digital fee answer that caters to each sort of day-to-day transaction.
If tokenised finance develops on closed, incompatible platforms with no protected settlement asset, fragmentation may improve and the singleness of cash might be weakened.
And when Europe relies upon excessively on infrastructures, applied sciences or options managed elsewhere, our resilience and financial sovereignty is diminished.
The query, subsequently, just isn’t whether or not funds and finance will turn into extra digital. They already are.
The query is how we are able to be sure that our financial system continues to protect the singleness of cash, belief and stability, whereas additionally supporting effectivity, resilience and autonomy as this transformation unfolds.
Our reply is to increase central financial institution cash into the digital atmosphere whereas preserving the two-tier financial system through which private and non-private cash coexist.
In retail funds, this implies making ready for a digital euro. In wholesale markets, it means guaranteeing that central financial institution cash can be utilized to settle tokenised transactions – via Pontes – whereas working with the market – via Appia – to form the broader digital finance ecosystem.
These initiatives are sometimes mentioned individually. However they’re all a part of one complete technique: to maintain central financial institution cash on the coronary heart of retail and wholesale finance, whereas giving European market members the infrastructure they should innovate, develop and stay aggressive internationally.
Central financial institution cash because the anchor
Our financial system rests on the coexistence of private and non-private cash.
Central financial institution cash is the final word risk-free settlement asset. And it helps the function of personal cash as a result of belief in industrial financial institution cash rests on its convertibility at par into central financial institution cash.
This convertibility ensures the singleness of cash. One euro has the identical worth as another, all through the euro space.
Our goal just isn’t subsequently to interchange non-public cash or non-public innovation. It’s to supply a secure public basis to make sure day-to-day funds are low-cost, resilient and inclusive. And to allow monetary innovation to develop safely, at scale, in an built-in European market.
Getting ready a digital euro for retail funds
Let me flip first to retail funds. That is what the digital euro is for: our day-to-day transactions.
A Europe-made, Europe-wide funds answer
There’s nonetheless no European digital technique of fee that works throughout all euro space nations and all main use circumstances.
European non-public options are inclined to cowl particular markets or fee conditions. Which means banks and their clients rely closely on worldwide card schemes and international expertise corporations.
Two-thirds of euro space card funds depend on worldwide schemes. Of the 21 euro space nations, 13 don’t have any home card scheme. And the place a home fee answer exists, it doesn’t all the time cater to all use circumstances and can’t be utilized in different euro space nations with out co-badging with worldwide schemes.
This isn’t only a query of sovereignty, resilience and freedom of selection. Additionally it is a query of competitiveness.
European fee service suppliers have thus far been unable to compete with worldwide fee options on a European scale, not to mention at international degree. That is primarily as a result of it could be pricey for every particular person supplier to develop a Europe-wide acceptance community.
The latest announcement of an interoperability platform that may permit non-public fee options to share clients, enabling customers to pay wherever interoperable options are accepted, is a step in the appropriate route and one we very a lot welcome. However a lot stays to be finished: cross-border transactions account for simply 5% of the market and interoperability doesn’t broaden acceptance domestically, nor does it broaden the use circumstances lined.
The digital euro would fill this hole.
It might present a digital type of central financial institution cash for on a regular basis funds, complementing money and personal options. It might be obtainable each on-line and offline and can be usable all through the euro space for many use circumstances: person-to-person funds, e-commerce transactions and funds in bodily retailers.
However the ECB wouldn’t present customer-facing providers. Banks and different regulated fee service suppliers would distribute the digital euro, handle buyer relationships and develop complementary providers.
Our goal is to not take over the function of banks. Quite the opposite, the digital euro would equip banks with the infrastructure they should compete within the digital age and assist them broaden the attain and use circumstances of their very own options.
A platform fee service suppliers can construct on
The digital euro would offer a typical acceptance layer throughout the euro space.
Its authorized tender standing would give it pan-European attain: it could be accepted wherever digital funds may be made.
The digital euro’s open requirements might be utilized by non-public fee providers suppliers, thereby simplifying acceptance at bodily factors of sale, on-line and in cellular commerce.
The ECB has signed agreements with the European Card Cost Cooperation, nexo requirements and the Berlin Group to reuse established European technical requirements for digital euro funds. This could minimise adoption prices.
Co-badging would add to those advantages. Banks may combine the digital euro into current playing cards or cellular functions alongside their very own fee options. The place a non-public answer is accepted, it may stay the popular choice. The place protection is incomplete, the digital euro would step in to make sure that non-public answer customers can nonetheless pay.
A sustainable financial mannequin
The digital euro can be being designed with a sustainable financial mannequin in thoughts.
The Eurosystem would bear the prices of building and working its core infrastructure and wouldn’t cost any scheme or processing charges for digital euro transactions. Banks and fee service suppliers can be compensated for the providers they supply. The exact preparations are presently being mentioned as a part of the legislative course of.
The digital euro just isn’t subsequently merely a brand new public fee instrument. It might present public infrastructure that may assist non-public European options scale up, supply value-added providers and compete extra successfully Europe-wide.
Safeguarding monetary stability
Each time a central financial institution proposes a digital type of cash, a respectable query arises: may deposits depart banks, impairing their capability to supply credit score?
We now have taken this query very significantly.
The digital euro is being designed as a method of fee, not an funding product. It might not be remunerated, and particular person holdings can be topic to limits.
Customers would have the ability to hyperlink their digital euro holdings to a industrial checking account. A waterfall mechanism would permit customers to make funds exceeding their digital euro stability by drawing the distinction from that account. A reverse-waterfall mechanism might be used to mechanically switch to the linked checking account incoming quantities above the holding restrict – or a good decrease threshold if the shopper so needs. Behavioural analysis means that this strategy may drive up digital euro adoption whereas lowering particular person holdings.[1]
The boundaries must be calibrated to stability three goals: making the digital euro handy to make use of, safeguarding monetary stability and preserving the graceful implementation and transmission of financial coverage.
Detailed evaluation helps these safeguards.[2]
On the request of the European Parliament, the ECB examined the attainable results of hypothetical holding limits from €500 to €3,000 on the stability sheets of two,025 banks, together with each vital and fewer vital establishments.
It thought-about two situations: business-as-usual and flight-to-safety. The flight-to-safety situation is an excessive tail situation that has not occurred over the primary 25 years of the euro. It additionally assumes no financial coverage response, though a disaster of this type would usually lead the central financial institution to contemplate taking motion.
The outcomes are reassuring beneath each situations.
Underneath the business-as-usual situation the introduction of the digital euro is projected to have a particularly contained affect on banks’ liquidity and funding metrics.
Certainly, digitalisation itself helps financial institution deposits, as funds migrate from money to deposit-based devices. Our evaluation estimates a possible €127 billion deposit influx by 2034, equal to 0.4% of banking sector property or 1.5% of retail sight deposits. At combination degree, this exceeds the estimated digital euro-related outflows within the business-as-usual situation for holding limits as much as and together with €3,000. No combination outflow would thus be recorded.[3]
If we disregard the deposit inflows ensuing from the persevering with decline in using money, the mixture liquidity protection ratio would fall solely barely, from 166% to 163%, for a restrict of €3,000. The mixture web secure funding ratio would decline from 128% to 127%.
The intense situation additionally produces manageable outcomes, even once we take a really conservative view and ignore the development in direction of digitalisation. On combination, regulatory liquidity metrics stay nicely above 100%. With a holding restrict of €3,000, the liquidity protection ratio falls to 100% for less than 13 banks, representing 0.3% of complete banking sector property. And solely 9 of these, representing 0.1% of complete banking sector property, can be vulnerable to liquidity buffers going beneath that degree.
These findings have to be interpreted inside the scope and assumptions of the evaluation. The figures are illustrative and don’t symbolize a choice on the eventual holding restrict.
However the conclusion is obvious: inside the vary assessed, holding limits are efficient in containing deposit outflows and safeguarding monetary stability.
The digital euro is subsequently not designed to disintermediate banks. It’s designed to safeguard their function because the financial system turns into more and more digital.
Additionally it is price noting that the dialogue concerning the monetary stability implications of the digital euro usually disregards the truth that individuals can already simply and immediately switch their deposits from financial institution accounts to different entities, the place – in contrast to with the digital euro – they could be remunerated, limitless or denominated in foreign currency echange.
The place the challenge stands
So the place will we stand?
The legislative course of is advancing. The Council of the European Union agreed on its place in December 2025, the European Parliament adopted its place in July 2026 and the trilogue negotiations at the moment are beneath manner. The European Council has referred to as for the negotiations to be concluded by the tip of this yr.
The Governing Council of the ECB will solely resolve whether or not to challenge a digital euro after the laws has been adopted. Assuming the legislative course of is totally concluded by the tip of 2026, we purpose to be prepared for a possible first issuance in 2029.
However technical preparation should advance in parallel.
The digital euro pilot is deliberate to start within the second half of 2027 and run for 12 months. We now have chosen 36 fee service suppliers from throughout the euro space, following a name that attracted greater than 50 functions.[4] Final week, the chosen suppliers and the Eurosystem met to start out work on the subsequent stage.
The target just isn’t merely to check out the expertise. A fee system is an ecosystem, involving service suppliers, retailers, central banks, infrastructure operators and customers. The pilot will permit that ecosystem to check the design, be taught from expertise and determine areas for enchancment.
On 15 September we opened a name for e-commerce and mobile-commerce retailers to participate within the pilot. Individuals will take a look at buyer fee journeys, assess integration with current checkout programs and supply suggestions on the consumer expertise.[5]
Furthermore, the digital euro just isn’t meant simply to repair any shortcomings within the current euro space funds panorama. Additionally it is a possibility to consider the long run and supply a platform to innovate, to boost the standard and breadth of fee providers. New alternatives are rising, and we need to guarantee that European fee service suppliers are totally outfitted to grab them and achieve a powerful aggressive edge.
Final week we subsequently launched a brand new wave of actions via the digital euro innovation platform, constructing on an preliminary train that concerned round 70 market members.[6]
One workstream will experiment with built-in digital receipts, funds involving a number of payers or recipients, conditional funds and new options supplied via fee apps.
A second workstream will look additional forward, exploring developments that would improve digital euro funds sooner or later. This contains attainable functions of synthetic intelligence, reminiscent of AI-enabled funds or micropayments. The workstream can even discover digital euro use in public providers, together with funds for transportation, mobility and parking providers or funds to and from public authorities.
We can’t know exactly how Europeans will need to pay in 20 years’ time. However we are able to construct a basis that’s open to innovation, strong sufficient to earn public belief and in a position to develop as customers’ wants evolve.
Tokenisation and the way forward for finance
Let me now flip to wholesale markets.
Tokenisation can carry issuance, buying and selling, clearing, settlement, custody and asset servicing right into a shared digital atmosphere. Good contracts can automate coupon funds, collateral actions and compliance checks. Money and property may be exchanged atomically, which means that both each legs of a transaction are settled collectively or neither is.
The potential advantages embody larger automation, quicker settlement, decrease processing prices and extra environment friendly use of liquidity and collateral. However these advantages will solely materialise totally if tokenised markets have entry to a protected and scalable settlement asset.
Pontes: central financial institution cash for tokenised finance
For this reason the Eurosystem launched Pontes on 21 September.
Pontes permits wholesale transactions in tokenised property to be settled in central financial institution cash. It connects market DLT platforms with Eurosystem providers. It’s an operational service that banks, market infrastructures, issuers and buyers can use to broaden safely into digital finance.
The service can be enhanced progressively according to market wants and technological developments, as an illustration by extending working hours and providing quick settlement finality on the Eurosystem DLT platform. Full implementation is anticipated by mid-2028, once we plan to supply a 24/7 service in addition to larger programmability, state-of-the-art resilience and multi-currency functionality.
Appia: shaping the broader ecosystem
Appia appears to be like additional sooner or later.
Appia addresses the structure, requirements and governance required for an built-in European tokenised monetary ecosystem. It covers asset interoperability, collateral administration, tokenised central financial institution cash infrastructure, cross-border transactions, resilience and interplay with the authorized framework.
The work on Appia is predicated on evaluation, experimentation and cooperation between the Eurosystem and different central banks and personal market members. Our objective is to ship a blueprint in 2028.
The market is already actively concerned on this work. The general public session on the Appia roadmap obtained 127 responses, and 90% of respondents made at the least one proposal to contribute. Our market contact group, comprising 61 entities chosen from among the many greater than 100 that utilized, will present steady enter and route for the work.[7] We additionally plan to run concrete work involving groups that carry collectively market members, nationwide central banks and the ECB.
The guideline is simple: we must always lay the foundations of an built-in European digital finance ecosystem earlier than incompatible programs turn into entrenched.
For banks, this implies entry to an ecosystem through which they will challenge tokenised deposits, present custody providers and asset servicing, mobilise collateral and develop programmable monetary merchandise throughout a European market.
Collectively, Pontes and Appia will help European banks maintain tempo with the transformation of worldwide finance, whereas avoiding dependence on international infrastructures or settlement property denominated in foreign currency echange.
Supporting tokenised deposits throughout banks
Pontes and Appia are additionally vital for the way forward for industrial financial institution cash.
Tokenised central financial institution cash just isn’t meant to crowd out tokenised industrial financial institution deposits. Quite the opposite, it could possibly present the settlement anchor that permits tokenised deposits to develop safely and obtain scale.
It’s because it’ll allow deposits issued by totally different banks to be exchanged. With out central financial institution cash, industrial financial institution cash would fragment into separate tokens circulating inside closed networks. This could give a built-in benefit to the most important worldwide financial institution.
Our strategy is to protect, within the tokenised atmosphere, the precept that applies at this time: a euro issued by one regulated financial institution needs to be exchangeable at par with a euro issued by one other.
Pontes can thus be the bridge between non-public settlement property, enabling tokenised deposits to be transferred between banks.
Conclusion
Let me conclude.
We’re modernising public cash and public infrastructure so that non-public innovation can flourish on a secure and built-in basis.
The digital euro would give banks entry to frequent requirements and a pan-European acceptance community. It might assist them keep buyer relationships, develop value-added providers and compete extra successfully throughout borders. And it could incorporate safeguards, supported by detailed evaluation, defending financial institution intermediation and monetary stability.
In terms of digital finance, we’re front-runners. Pontes is already making central financial institution cash obtainable for tokenised transactions. Appia appears to be like forward to an ecosystem through which tokenised central financial institution cash, tokenised deposits and different regulated property can coexist and work together throughout establishments and networks with out friction.
Collectively, these initiatives serve one goal: a European monetary system that’s revolutionary, built-in, resilient and internationally aggressive. We are going to construct it collectively.
The historical past of cash is one in every of steady adaptation.
Our job is to protect what makes cash reliable as expertise evolves. That’s the function of central banks within the digital age.
And by taking part in that function in shut partnership with market members, we are able to be sure that the digital transformation strengthens Europe’s monetary system and advantages all Europeans.
Thanks.
