23 September 2024

ECB's Cipollone: From dependency to autonomy: the role of a digital euro in the European payment landscape

A digital euro would strengthen Europe’s financial sovereignty and resilience because it would be built with European technology and infrastructure. It would empower Europe to independently develop and manage digital payment solutions, supporting the further deepening of the Single Market.

The ECB appreciates the open and valuable exchanges we have had with the ECON Committee on the digital euro since the beginning of the project. I am fully committed to continuing these exchanges and look forward to our future discussions.

Today I will focus on three key areas. First, Europe’s dependency on foreign players for retail payments. Second, the benefits of a digital euro for everyone, including consumers, merchants and banks. And third, the progress we have made on the digital euro project so far.

Foreign dominance in the European payment landscape

Fast-forward to the year 2030. Imagine you are at the football World Cup in Spain. You want to buy a drink, but you can only pay with Alipay. This scenario is not as far-fetched as it may seem: this summer, buying tickets for the European Football Championships in Germany was only possible with Chinese or American means of payment.

Could you imagine this happening in the United States? Going to the finals of the American football league, for example, and having no American means of payment available? I certainly cannot.

The Eurosystem will of course continue to ensure that people in Europe can pay with cash.^[1] However, cash is becoming less and less popular as digital payments and online shopping grow.^[2]

For example, more and more people are buying their groceries online. But you can’t use cash to pay for these. More often than not, the only option is PayPal or an international card scheme like Visa or Mastercard.

And more and more people are using digital wallets like PayPal or Apple Pay on their mobile phones. By 2027 these platforms are expected to handle 40% of e-commerce and 27% of in-store payments in Europe.^[3]

At the same time, the share of companies in the euro area not accepting cash has been increasing significantly.^[4]

These developments are contributing to the marginalisation of elderly and less tech-savvy people. They also make us dependent on non-European companies, which is risky.

Imagine what would happen if you could not pay digitally. For example, two weeks ago significant parts of the European card payments market were shut down for almost an entire day.^[5] Just like with electricity, gas or water, we don’t think about payments until they stop working. For energy, we had to learn this the hard way following Russia’s invasion of Ukraine. For payments, we owe it to Europeans to do better.

We need our own strong digital payments system.^[6] We can achieve this by bringing central bank money into the digital era with the introduction of a digital euro: a digital form of cash, issued by the central bank and available to everyone in the euro area.^[7]

A digital euro would strengthen Europe’s financial sovereignty and resilience because it would be built with European technology and infrastructure. It would empower Europe to independently develop and manage digital payment solutions, supporting the further deepening of the Single Market.^[8]

But most importantly, the digital euro would offer tangible benefits to all stakeholders – consumers, merchants and banks.

Benefits for European citizens

We strongly support the Single Currency Package^[9], which will ensure that cash remains widely accessible and accepted. At the same time, it will pave the way for a digital euro, which would take the advantages of cash into the digital world.

 

ECB

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