ECB: Digital Euro Is Crucial for Europe's Autonomy
Liam PetersonThe ECB champions a digital euro to secure Europe's economic sovereignty, citing dependence on foreign payment providers and stablecoin risks.
A digital euro is essential to guarantee Europe’s economic sovereignty and reduce its dependence on foreign payment providers, according to European Central Bank Executive Board member Piero Cipollone.
"Today, Europe is significantly reliant on non-European payment systems and if we don't do anything this reliance will increase," Cipollone stated in Rome. He described this dependence as a "structural vulnerability" for the region's economy.
Breaking Dependence on Foreign Payment Giants
For years, the ECB has been developing a digital counterpart to cash, aiming to lessen the continent's reliance on US-based firms like Visa, Mastercard, and PayPal for everyday retail payments.
Concerns over this financial dependency have intensified amid recent trade threats from Donald Trump. However, Cipollone emphasized that the initiative is driven by the ECB's core mission, not external politics.
"It's not, however, about reacting to someone, but about acting on our mandate," he said. "The ECB must guarantee the proper functioning of payment systems and such a marked dependency on extra-European systems in such a crucial sector represents a systemic risk."
Project Timeline and Political Hurdles
The ECB's project, launched in 2021, is currently awaiting a solid legal framework. Cipollone reiterated a potential timeline where a pilot phase for the digital euro could begin in 2027, with a full issuance following in 2029.
Progress has been slow. While the European Commission presented a proposal in 2023 and member states reached a common position in December, the biggest roadblock remains the European Parliament, which has yet to finalize its stance. Some lawmakers reportedly favor a private-sector alternative over a public digital currency.
The Stablecoin Threat
Cipollone also addressed the risks posed by stablecoins, which have been championed by figures like Trump. He warned that these instruments could "threaten financial stability" in Europe. The International Monetary Fund has echoed these concerns, noting that stablecoins could disrupt traditional lending, weaken monetary policy, and trigger runs on safe assets.
The ECB official suggested that citizens should be provided with simple and reliable public alternatives. "The response is to guarantee an efficient combination of public and private money in euros," Cipollone explained.
While the primary objective of the digital euro is to serve the domestic economy, he noted that the infrastructure could eventually be expanded for use by countries outside the euro area.
