The digital euro: legal tender in the digital age - Piero Cipollone
Central bank: ecb | Type: speech | Date: 2025-07-14

SPEECH

The digital euro: legal tender in the digital age

Introductory statement by Piero Cipollone, Member of the Executive Board of the ECB, at the Committee on Economic and Monetary Affairs of the European Parliament Brussels, 14 July 2025

Thank you for inviting me to take part in this exchange of views.

I would like to talk about why we need the digital euro – and the cost of not pursuing it.

My message is simple.

The main reason for issuing a digital euro is to preserve the benefits of cash in the digital era.

To do so, we need to complement physical cash with a digital form of cash.

The inability to use physical cash in online transactions or for digital payments at the point of sale deprives us of a key payment option, reducing resilience, competition, sovereignty and, ultimately, consumers’ freedom to choose how to pay.

This increases the risks that European consumers, merchants and policymakers face.

For a growing number of their transactions, Europeans lack access to central bank money – the money that is backed by the sovereign and has legal tender status, underpinning our monetary union because it is accepted everywhere in the euro area.

Monetary sovereignty and people’s freedom to pay with legal tender: two sides of the same coin The Eurosystem is committed to cash and will continue to issue it.[1] But people’s habits are shifting towards digital payments.

As the role of online payments has grown, the role of cash in day-to-day transactions has been declining at pace: between 2019 and 2024 its share fell from 68% to 40% in volume terms and from 40% to 24% in value terms.[2]

This has two important implications.

First, the role of cash will be significantly reduced if we do not provide a digital equivalent.

If we fail to act, we will fail to fulfil our responsibility as a central bank towards the people we serve.

Second, our monetary sovereignty is eroding.

People’s ability to pay across the euro area with sovereign money – cash – and frequently choosing to do so, is a key pillar of monetary sovereignty.

A digital form of cash would protect our sovereignty and ensure our monetary union is also a digital monetary union.

What’s particularly concerning in Europe is that the gap left by declining cash use is being filled by non-European payment solutions.

For card payments, only seven out of the 20 euro area countries have a national card scheme.

These card schemes cannot be used in other euro area countries and are also losing market share domestically.

For e-commerce, European-owned solutions are prevalent in only three euro area countries.[3]

Strengthening our legal tender to stop the erosion of our monetary sovereignty To address this situation, the Single Currency Package protects the rights of those who want to continue to pay with cash, while complementing physical cash with a digital form of the legal tender: the digital euro.

I believe we are being presented with a false choice: a private pan-euro area payment solution or a public one.

First, it is not just about payments; it is about the evolution of the money.

And second, it is a historical fact that state-issued money and money issued by private parties have typically coexisted, reinforcing each other.[4]

The cost of inaction

Since the start of the euro, we have recognised the need for an integrated retail payments market.

This prompted the development of the Single Euro Payments Area (SEPA) to harmonise bank transfers.

However, SEPA does not cover key use cases such as payments at the point of sale.

Over the years, private firms have made several attempts to create a pan-European payment solution, but difficulties in coordinating among market participants prevented those firms from delivering a scalable and unified system.[5] Some 25 years after the launch of the euro, we still have no European payment solution that allows people to pay digitally throughout the euro area in stores, for e‑commerce goods and services and from person to person.

Let us take a leap of faith.

Imagine things would be different this time and that banks would manage to work together to rapidly provide a pan-European private payment solution.

Would it still make sense to have the digital euro?

The answer is yes.

First, the digital euro would help preserve money as a public good that is easily accessible to everyone and universally accepted across the euro area.

By contrast, private money belongs to the competitive space, so we cannot guarantee its acceptance by all merchants.

Second, the digital euro would enhance resilience.

We would have a reliable fallback in times of crisis, complementing cash.

An especially important feature is that the digital euro would also function offline, providing a secure payment method even without an internet connection.[6] Moreover, as is the case with cash, we would be sure that all components of the digital euro remain in European hands.

Third, the digital euro would prevent market concentration.

The availability of legal tender and its wide adoption would put merchants in a stronger position to negotiate fees.

In addition, the digital euro would create open standards with a wide acceptance network, making it easier for payment service providers to scale up their solutions.

This would result in greater competition and innovation at European level.[7]

Conclusion Let me conclude.

The Treaty on the Functioning of the European Union entrusts you, the co-legislators, to “lay down the measures necessary for the use of the euro as the single currency.”

We can together ensure that our currency is fit for the digital age by complementing physical cash and private payment initiatives with digital cash.

Indeed, the digital euro is key to preserving the benefits of cash in the digital era.

Cash as legal tender is a cornerstone of public trust in currencies, including the euro.

It supports the stability of our currency and the effectiveness of our monetary policy.

See also P. Cipollone (2025), “The role of the digital euro in digital payments and finance”, contribution to Bancaria based on remarks at the Crypto Asset Lab Conference on 17 January 2025, 28 February.

These are Belgium, the Netherlands and Portugal.

G10 central banks have stated: “the composite of central and commercial bank money, convertible at par, is essential to the safety and efficiency of the financial system and should remain the basis of the singleness of the currency” (see Committee on Payment and Settlement Systems (2003),

The role of central bank money in payment systems , Bank for International Settlements, August).

The example of instant payments shows that, despite advances in regulation and technology, the market has failed to deliver a scalable solution due to problems in coordinating among market participants.

Also, the European Payments Council and industry groups have worked on common standards (e.g. SEPA Cards Framework), but no concrete unification of card networks has materialised.

This contrasts with a historical example of ensuring resilience.

Between 1964 and 1988 it was a state secret that the Bundesbank held 15 billion Deutsche Marks in substitute currency in the Cochem bunker.

The Deutsche Mark had by then established its credibility as an international currency.

Germany feared that counterfeit money could be smuggled into the country in large quantities in order to undermine confidence in the Deutsche Mark and bring down the economy.

Had this happened, the substitute currency would have been distributed to ensure the continuity of everyday commerce.

The digital euro rulebook would mandate common standards across the euro area.

The digital euro acceptance standards would be made available for free to private parties, who would be able to use them as a basis for developing their services.

This would help private providers achieve pan-European acceptance on a technical level, leading to cost efficiencies and a more integrated European payment market.

The expansion of both their geographical reach and their portfolio of products would, in turn, make it easier for them to compete internationally.

While technical acceptance would be guaranteed, commercial agreements would still be needed.

For more information, see Cipollone, P. (2025), “Update on the work of the digital euro Rulebook Development Group”, letter to Aurore Lalucq, Chair of the Committee on Economic and Monetary Affairs of the European Parliament, 9 April.