In a contribution to Bancaria based on remarks delivered at the Crypto Asset Lab Conference, European Central Bank Executive Board member Piero Cipollone argues that Europe should prioritise digital payments and digital finance and frames the digital euro and wholesale settlement in central bank money as central to reducing fragmentation and reliance on non-European providers. The article links the digital euro project to declining cash usage and the growing role of international card schemes. Cash transactions have fallen below card transactions in value in the euro area, while the share of companies not accepting cash has risen to 12% over the past three years. More than two-thirds of euro area card transactions were settled through international payment schemes in the second half of 2023, and 13 out of 20 euro area countries rely entirely on non-European solutions in the absence of a domestic scheme. Cipollone describes the digital euro as a universally accepted public solution for in-store, online and person-to-person payments, available both online and offline and free for basic use, with payment service providers remaining central to distribution and able to be compensated for related services. He also notes that the European Commission’s draft legislation would give the digital euro legal tender status, implying acceptance by merchants that already accept electronic payments, and outlines a model in which merchant fees for digital euro services would be subject to a cap and the Eurosystem would bear issuance costs. For wholesale markets, he highlights the Eurosystem’s 2024 exploratory work linking TARGET Services to market distributed ledger technology platforms, involving 60 participants and over 40 experiments and trials, including the first issuance of an EU sovereign bond using DLT and €1.6 billion settled via trials over six months. Looking ahead, the Eurosystem aims in the short term to make it possible to settle DLT transactions in central bank money, based on interoperability between market DLTs and the Eurosystem and enforceable standards that also support interoperability between market platforms. Longer-term work will examine options for a more integrated ecosystem, including a European shared ledger bringing tokenised central bank money, commercial bank money and other digital assets together, or a coordinated set of fully interoperable technical solutions.
European Central Bank 2025-02-28
European Central Bank sets out the case for a digital euro and next steps to enable central bank money settlement for DLT-based wholesale transactions
ECB Executive Board member Piero Cipollone stresses digital payments' importance in Europe, highlighting the digital euro's role in reducing fragmentation and reliance on non-European providers. The European Commission's draft legislation would grant the digital euro legal tender status, with capped merchant fees and issuance costs borne by the Eurosystem. For wholesale markets, the Eurosystem's 2024 exploratory work focuses on linking TARGET Services to distributed ledger technology platforms for interoperability and a more integrated ecosystem.