Piero Cipollone, ECB Executive Board member, highlights the importance of central banks embracing technology, digital euro development, and strategic initiatives to modernize European payments and digital assets.
Guest lecture by Piero Cipollone, Member of the Executive Board of the ECB, at the Frankfurt School of Finance & Management.
Money remains central to central banks’ roles, primarily issuing money and safeguarding its value. However, the environment in which they operate is changing due to technological advances.
Digital payments have become the norm, with new technologies disrupting financial services. Central banks must adopt these technologies to maintain their roles; failure to do so risks losing their central position in money issuance and financial stability.
In Europe, the central bank aims to lead this transformation to leverage financial integration, ensuring the single monetary and digital money systems across the euro area. The euro is the world’s second most important currency, supported by robust infrastructures like T2, T2S, TIPS, and ECMS, enabling safe and efficient transactions.
Challenges include retail payment fragmentation, the evolving nature of money with tokenisation and DLT, and slow, costly cross-border payments. Inaction could threaten the resilience of the payment system, monetary sovereignty, and Europe’s global role.
The ECB emphasizes a public-private partnership approach, promoting innovation while ensuring safety and interoperability. Initiatives include the digital euro, which aims to provide a European digital cash equivalent, support banks’ roles, and foster private sector solutions.
The digital euro will enable a single market for retail payments, reduce costs, and support privacy. It will also facilitate private sector expansion and interoperability, with standards developed collaboratively.
In wholesale markets, projects like Pontes and Appia aim to settle DLT-based transactions in central bank money and develop an integrated digital asset ecosystem, respectively. These efforts will support tokenisation and digital asset markets at a continental scale.
For cross-border payments, the Eurosystem plans to interlink fast payment systems, explore tokenised settlement assets, and develop international use features for the digital euro, enhancing speed, reducing costs, and maintaining sovereignty.
In conclusion, Europe must modernize its payment systems with a strategic approach based on central bank money, public-private collaboration, and technology neutrality. Acting now will ensure Europe remains competitive, resilient, and sovereign in the digital economy.
Source: ECB official announcement
