The European Central Bank (ECB) presented its case for a digital euro to the European Parliament’s economic committee this week. ECB board member Piero Cipollone described the digital euro as a safeguard for public access to payments during times of disruption.
Cipollone stated the proposed currency would offer all Europeans a free and accepted digital form of payment, even during major outages. He said much of the euro area’s payment systems are controlled by non-EU providers, and that this reliance could slow response efforts in a crisis. He suggested the digital euro could act as a fallback in events such as cyberattacks or infrastructure failures.
The ECB official said the digital euro would not replace cash but would be used alongside it. He noted that cash is still important, though digital payments have become part of everyday life. He added that it’s the job of public institutions to make sure people can use these payment options safely.
Lawmakers Raise Privacy and Banking Questions
Several members of parliament expressed concern about the design of the digital euro, especially regarding privacy and its effect on commercial banks. Some questioned whether central bank-backed accounts would lead people to shift funds away from private banks.
In response, Cipollone said,
“The central bank will not know anything about the payer and the payee.”
He also explained that offline payments using the digital euro would match the privacy offered by cash.
Pierre Pimpie of the Patriots for Europe group voiced doubts, saying, “Accounts in private banks could be emptied” if users moved funds to the central bank. He also raised objections to the ECB’s control over caps on user accounts. He warned that in a crisis, the bank could raise the limit, pulling more deposits away from private banks.
Cipollone responded that any caps would be based on research and modeling. He added that in times of financial stress, users might prefer stablecoins or foreign currencies.
“The digital euro at that point would be the least of our problems,” he said.
Timeline and Lawmaking Process
Lawmakers began reviewing proposals for the digital euro in 2023. Progress has slowed, partly due to political changes and the 2024 elections. Piero Cipollone said the European Central Bank is moving forward with the expectation that a legal agreement could be reached by mid-2026.
Before anything moves ahead, the plan needs approval from the European Parliament, the European Commission, and the European Council. Talks between the three groups are ongoing, and no fixed timeline has been set for a final decision.
Full Launch May Happen by 2029
If the legislation is passed, the ECB would need time to build and test the necessary systems. Cipollone stated this phase could take up to three years. Based on that schedule, a public launch would not be expected before 2029.
The ECB has repeatedly said the digital euro would be optional and would not replace cash. Officials maintain it would support the euro area’s payment system by offering a public option, especially when digital tools are required.
