The European Central Bank, in a speech by Executive Board member Piero Cipollone, outlined the Eurosystem’s strategy to modernise central bank money in response to digitalisation in payments and finance and rising risks of market fragmentation. The approach centres on three workstreams: preparing for a potential digital euro, exploring new technologies for settling wholesale transactions in central bank money, and strengthening cross-border interlinking. The ECB framed the strategy against declining cash use, increased reliance on non-European retail payment providers, the lack of a pan-euro-area digital retail payment solution, and the possibility that new settlement assets could reintroduce fragmentation and credit risk. For the digital euro, the ECB highlighted goals of euro-area-wide acceptance for everyday digital payments, use of open standards and an acceptance network to support innovation and pan-European reach, and design choices aimed at strategic autonomy and resilience including European governance and infrastructure and offline functionality. For wholesale markets, the Eurosystem has tested the use of distributed ledger technology and tokenisation for the settlement of wholesale transactions in central bank money, with work described as supporting safer and more efficient market infrastructures and enabling an integrated European market for digital assets, alongside initiatives such as PONTES to link DLT platforms with TARGET Services and APPIA as a longer-term approach for an integrated European payments and securities ecosystem. On cross-border payments, the ECB pointed to implementing a cross-currency settlement service and leveraging the multi-currency feature of the Eurosystem’s instant payments settlement service, TARGET Instant Payment Settlement, to settle funds end to end instantly in central bank money for TIPS-hosted currencies. It also referenced interlinking with fast payment systems outside Europe through multilateral networks, aligned with G20 cross-border payments objectives.
European Central Bank 2025-09-17
European Central Bank sets out strategy to modernise central bank money with digital euro foundations, DLT wholesale settlement and cross-border interlinking
The European Central Bank (ECB) plans to modernize central bank money, focusing on a digital euro, new technologies for wholesale transactions, and cross-border interlinking. The ECB aims for euro-area-wide acceptance of a digital euro, using open standards and European governance for strategic autonomy and resilience. It is also exploring distributed ledger technology and tokenization for wholesale markets and enhancing cross-border payments through multilateral networks and instant settlement services.