Newsroom / CNA
ECB Executive Board member Piero Cipollone said the planned digital euro could bring major advantages for Cyprus, particularly for small and medium-sized businesses that currently face high fees when accepting card payments through international schemes.
Speaking to the Cyprus News Agency, Cipollone described the digital euro as essentially an electronic form of cash. The goal, he said, is to keep the convenience and freedom associated with banknotes while making it usable in situations where physical cash no longer works, such as online shopping and e-commerce.
Lower costs and stronger competition for small businesses
Cipollone argued that SMEs in Cyprus stand to gain significantly because smaller merchants often pay far more in transaction fees than large retailers when using international card networks. Under a digital euro system, costs could drop sharply since the ECB would not impose card-scheme style fees. He added that having a public digital payment option would also improve competition by giving merchants more leverage when negotiating with private payment providers.
A single European payment option, including offline use
Cipollone said the digital euro would also address the fragmented nature of Europe’s current payment landscape. Unlike today’s mix of different systems, it would function as one tool that could be used online, in physical stores, and even offline. Offline capability would allow transactions to continue even during power outages or connectivity failures, improving resilience.
Reducing reliance on non-European payment processors
A major part of Cipollone’s argument focused on Europe’s dependence on foreign companies. He warned that roughly 70% of card-based transactions in Europe are processed through non-European providers, creating a strategic weakness. He said Europe should be concerned about relying so heavily on outside infrastructure for something as essential as everyday payments, and argued that the digital euro could strengthen European autonomy.
Timeline depends on EU law, with pilots expected in 2027
Cipollone stressed that the project cannot move forward without EU legislation. He said the European Commission proposed the legal framework in June 2023, and EU Council discussions have already moved toward a position close to that proposal. The next major step is the European Parliament, which is expected to vote on its position in May.
If the legislative process stays on track, Cipollone said a legal agreement could be reached by the end of the year. Pilot programs could begin in 2027, with the ECB aiming to be ready for full issuance around mid-2029.
Banking stability safeguards built into the design
Addressing concerns that a digital euro might cause people to withdraw money from bank deposits, Cipollone said the ECB has designed safeguards to prevent destabilizing outflows. The digital euro would not pay interest, reducing incentives to treat it as a savings tool. Most payments would also work through an automatic mechanism that pulls funds from a bank account at the moment of purchase, meaning users would not need to move money into a separate wallet except for offline transactions.
He also said limits would be placed on how much individuals could hold in digital euros, and that only private individuals, not merchants, would be allowed to hold them. According to ECB simulations, he said, financial stability would remain protected even if holding limits were set relatively high. The final limit has not yet been decided and would be determined through a structured decision-making process involving EU institutions.
Privacy a central feature
Cipollone said privacy protections are a core part of the design. For online payments, the ECB would not see personal transaction identities, only encrypted information, while banks would continue handling customer data much as they do now. For offline payments, privacy would be even stronger because the transaction would occur directly between devices, with only the payer and payee aware of the details.
Exchange rates not an ECB target
In the same interview, Cipollone also commented on the euro’s recent rise against the US dollar. He said the exchange rate is not something the ECB targets directly, although it is considered as one factor in inflation forecasting. He noted that the euro’s recent movement has largely stayed within the same range seen over the past year, around 1.17–1.18 to the dollar.
With information from CNA.
