Growing geopolitical tensions are strengthening the case for a European digital payment system under local control. This was stated by ECB Executive Board member Piero Cipollone in an interview with El Pais.

He described CBDCs as "government money in virtual form," necessary to complement cash and address the fragmentation of the payment landscape in the region.

Cipollone provided specific data: by 2024, the share of fiat currency in everyday transactions is expected to drop to about a quarter (24%), significantly lower than the 2019 figure of 40%.

According to him, this situation compels the ECB to evolve in how it ensures that eurozone citizens have access to money as a public good.

Cipollone directly linked this task to the geopolitical context, warning that the "instrumentalization of any possible resource" and rising global tensions make the need for a European retail payment system, built on local technologies and infrastructure, even more urgent.

This system should be capable of meeting all of Europe’s payment needs without creating "excessive dependence" on foreign schemes, according to the ECB president.

He also emphasized the status of the digital euro as a legal means of payment. Cipollone stated that any seller already accepting digital payments "will be required to accept" this new form, effectively implying a mandatory regime for transactions in CBDC.

Digital Euro as a Catalyst for a Unified EU Payment Space

Cipollone rejected proposals to delay the project in anticipation of a purely corporate solution, reminding that "the ECB has been calling for the private sector to develop a pan-European solution for many years," which has yet to materialize.

He is convinced that launching the digital euro with a single open standard, mandatory for all merchants, will not crowd out private companies. On the contrary, it will incentivize banks and fintech firms to build a truly pan-European payment infrastructure.

Cipollone also opposed the idea of limiting the digital euro to an offline format. He stated that one of the key goals of the project is to address the lack of a European alternative for online payments in e-commerce.

His remarks came in the wake of an open letter dated January 11, signed by 70 economists and politicians. The authors urged EU lawmakers to "prioritize public interests" regarding the digital euro.

They also warned that further delays would only increase Europe’s dependence on dominant foreign and private payment systems.

ECB's Preparatory Phase

Currently, the ECB is conducting preparatory work on the digital euro project: developing a set of rules, technical architecture, and functionality before making a final decision on its issuance.

According to the regulator, the design of the CBDC represents a public, pan-European payment solution that ensures seamless access to central bank money—similar to cash. To maintain financial stability, tools such as storage limits and differentiated rewards will be applied.

The project aims to strike a balance between innovation, privacy, and preserving the key role of banks as intermediaries in the retail payment system, noted ECB Executive Board member Philip Lane in January.

However, several commercial banks and politicians criticize the digital euro. They fear potential displacement of deposits, operational costs, and uncertain demand from retail users.

In March, ECB analysts concluded that eurozone citizens show little interest in a virtual form of the European currency and do not see much value in CBDC.

It is worth noting that in March, a failure in the ECB's payment system raised new doubts among lawmakers regarding the regulator's ability to implement a national digital currency project.