Digital euro pilot aims to undo Europe’s payment dependency knot

The European Central Bank will pilot the digital euro next year using real transactions by ECB and national central bank staff, with Executive Board member Piero Cipollone saying the project could give Europe greater sovereignty over its payments infrastructure.

The pilot’s preparations involve 36 market operators, including seven from Italy, while the ECB is inviting e-commerce and mobile-commerce operators to participate. Cipollone said Europe’s reliance on external, non-European third parties can make it difficult to ensure that essential services continue operating smoothly. He did not cite specific third parties. “In recent years Europe has learned that, for some essential services, we cannot rely only on third parties. We saw this with energy and we’re seeing it today with defense. And the same is true for payments,” he said.

Cipollone made the case in an interview with Italy’s Milano Finance published by the central bank on Saturday. “The smooth functioning of payment systems is one of our responsibilities. If we are critically dependent on third parties, it’s not easy to ensure this smooth functioning,” he said. At an April public lecture in Latvia, he said two-thirds of euro-area card transactions are governed by non-European companies, creating a strategic vulnerability that a digital euro could help reduce by providing European-controlled payment infrastructure.

Cipollone said sovereignty would not require excluding third parties. “It means having the power to choose and knowing that, for an essential service like payments, Europe can also rely on its own strength,” he said. The ECB Governing Council can decide on issuing a digital euro only after legislative negotiations in Brussels conclude. “We hope that the regulation will be adopted by the end of the year, enabling the ECB’s Governing Council to issue a formal decision on issuance,” Cipollone told Milano Finance.