Nicosia: The digital euro would lower payment costs for small businesses hit by expensive international card schemes and reduce Europe's reliance on non-European providers that handle nearly 70% of card transactions, ECB Executive Board member Piero Cipollone told the Cyprus News Agency.
According to Cyprus News Agency, Cipollone described the digital euro as a "digital version of cash" that preserves the simplicity and freedom of physical money. He warned of growing strategic vulnerability and stressed that Europe must act now to build resilient, domestic payment infrastructure rather than deepen dependence on external companies. He also mentioned that the project remains conditional on EU legislation, with the European Parliament expected to vote on its position in May, potentially paving the way for pilot projects in 2027 and issuance by mid-2029.
Cipollone explained that the digital euro is intended to be a digital version of cash, preserving its simplicity and freedom while extending its use to areas where cash is no longer practical. He highlighted that the main advantages for citizens would be simplicity and choice, enabling them to pay 'everywhere in Europe for all use cases,' maintaining 'the freedom to pay as you wish to pay.'
For businesses, particularly small and medium-sized enterprises, Cipollone stated that the digital euro could significantly reduce the cost of accepting digital payments. He pointed out that Cyprus could benefit notably from this, given its heavy reliance on international card schemes. The existence of a public digital payment option would strengthen competition by giving small merchants greater negotiating power with private payment providers.
Explaining the need for a public digital currency despite the widespread use of private mobile wallets, Cipollone cited the fragmentation of today's payments market. The digital euro would offer a single instrument usable online, at the point of sale, and also offline, which is not available today. He framed the project as a matter of strategic autonomy and emphasized that Europe depends heavily on non-European providers for a core part of its financial infrastructure.
Cipollone outlined two parallel tracks towards a digital euro: technical preparedness within the ECB and the Eurosystem and the legislative process at the EU level. He mentioned that progress has accelerated on the legislative side, with the European Commission presenting its proposal in June 2023. The European Parliament is expected to vote on its position in May, and if all goes well, legislation could be in place by the end of the year.
Addressing concerns from banks about potential deposit outflows and liquidity issues, Cipollone assured that safeguards have been built into the design from the outset, emphasizing that financial stability is a central concern for the ECB. He detailed various measures, including non-remuneration of the digital euro and holding limits, to mitigate these concerns.
Privacy and data protection have been integral to the project from the beginning, Cipollone said, reflecting citizens' expectations. He explained that privacy measures for online and offline payments go well beyond existing digital payment methods, ensuring a high level of privacy for users.
Regarding the recent strengthening of the euro against the US dollar, Cipollone clarified that it does not directly influence the European Central Bank's monetary policy decisions. The exchange rate is considered as part of the broader analytical framework, and policy decisions depend on various factors, including updated projections and their impact on the inflation outlook.