The ECB claims that a digital euro is essential to preserve the role of cash in the growing digital economy.
The European Central Bank (ECB) is moving forward with plans for a digital euro, considering it crucial for maintaining European monetary sovereignty in the digital era.
On May 15, Piero Cipollone, member of the ECB Executive Board, highlighted during the France Payments Forum how the use of physical cash is rapidly declining. With the surge in digital transactions and e-commerce, the ECB believes a digital euro represents a crucial step to preserve the universal function of cash in a digitized form.
The dependencies of Europe’s payment sector
According to the Eurotower, the current European payment system has several vulnerabilities. About two-thirds of card transactions in the eurozone are processed by non-European companies, and as many as 13 euro area countries rely entirely on international payment networks for point-of-sale transactions.
Even countries with national card systems must collaborate with international networks to enable cross-border or online purchases. Players like PayPal, Apple Pay, and Alipay dominate digital payment solutions, often partnering with international networks to further expand their market presence.
The digital euro as a complement to cash
The ECB has stressed that the digital euro will not replace cash but will serve alongside it as legal tender, ensuring it is accepted wherever digital payments are available. One key feature, according to the central institution, will be offline functionality — offering users privacy similar to that of cash payments and enabling transactions even without network connectivity.
Beyond retail payments, the ECB is also advancing in the implementation of distributed ledger technologies (DLT) and tokenization to facilitate wholesale financial transactions. The ECB has announced it will soon provide tools to settle DLT-based transactions using central bank money.
