Brussels – How are digitalisation and new technologies redefining the payments landscape? It is around this question that the European Central Bank is working for a digital euro, and to this question that Piero Cipollone, an ECB Executive Board member and chair of the task force on the digital euro, is working tirelessly to find that future-proof answer.
“In this age of accelerated change, digitalisation is redrawing the map of finance and payments,” Cipollone recalled at a conference on the future of payments organised by Bocconi University in Milan. “We cannot remain stuck in the past, nor can we afford to act on instinct. Not when the foundations of our monetary system – trust, stability, and sovereignty – are at stake.”
The question of a digital euro is precisely that of European sovereignty. Today, cryptocurrencies are not issued by central banks but by private entities, and are not pegged to the European single currency. Electronic payment systems – understood as the Visa and MasterCard circuits – are not European. While within the single market and the eurozone, “most European retail payment solutions remain national, covering only a few use cases and lacking pan-European reach,” Cipollone complains. The Bancontact payment circuit, popular in Belgium and used exclusively for payments within Belgium, is a practical example of this.
https://www.eunews.it/2023/06/28/euro-digitale-alternativa-visa-mastercard/
“Because European solutions remain fragmented, they do not generate the scale, scope and network effects that are necessary to be competitive at European – let alone global – level,” laments the ECB Head of Euro Digital, who recalls: “This is a case in point of the situation described in the Draghi report,” that of barriers to growth and competitiveness, as these non-communicating national systems produce “smaller markets that hamper innovation by not fulfilling their potential on both the supply and demand sides.”
In a nutshell, today Europeans rely on a few, mostly non-European providers for their daily digital transactions, “undermining competition, limiting choice and slowing innovation, often in ways that go against both the public interest and fair competition,” Cipollone further complains. Conversely, with the digital euro, “private providers could scale their payment solutions across Europe at lower costs,” which would also benefit consumers.
Advance to the second phase, 2026, the year of acceleration
The ECB is determined to go ahead. In October 2023, the preparatory phase commenced, involving the activation of the first integrated payments and transactions platform. The results were so encouraging that they enabled the ECB to forge ahead to the second phase. The intention is “to launch a second round of. experimentation through the innovation platform in order to maximise the digital euro’s potential for innovation.” Concrete activities will be announced during the first half of 2026, as stated in the Digital Euro Innovation Platform’s Outcome Report.
Piero Cipollone [photo: Imagoeconomica]
After over two years of “experimentation” among some 70 networked players, including merchants, banks, fintech operators, and researchers, the information gathered, says Cipollone, shows that the central bank currency can support innovation. The digital euro enables “new applications, fostering market growth and ultimately simplifying everyday payments and processes for people and businesses.” A good result, then, and “the success of this initiative encourages us to continue on this path.”
The ‘safe haven’ from stablecoins
There is another aspect that Cipollone wants to highlight, namely the uncontrolled spread of stablecoins, which represents a growing concern. “New instruments bring new risks, along with new opportunities,” the ECB Executive Board member noted. “Stablecoins issued by non-European firms could create additional dependencies. And stablecoins denominated in foreign currencies could create currency substitution risks.” In this context, “in fact, the digital euro would reduce the risk that stablecoins pose to banks.” Information and studies indicate that, “With the digital euro allowing banks to offer consumers access to convenient, widely accepted and innovative payment services, consumers and merchants would have fewer incentives to turn elsewhere.”
Benefits for the environment
Another element not to be underestimated related to the digital euro and the all-European payment system is the resulting automatic electronic invoicing. Integrated electronic receipts (e-receipts) within the digital euro ecosystem could provide consumers with structured access to their purchase records, simplifying activities such as returns, warranty claims, expense reporting, and personal budgeting. For retailers, e-receipts could significantly reduce operational costs and improve efficiency.
“Eliminating billions of printed receipts each year would not only simplify people’s lives, but also bring clear environmental benefits such as reducing chemical waste, resource use, and emissions,” the ECB report points out. Furthermore, e-receipts would be strongly encrypted, meaning that they could only be seen by the buyer and seller.
English version by the Translation Service of Withub
