Piero Cipollone: Interview with Cyprus News Agency

8 February 2026

The idea of a digital euro has raised many questions across Europe. Could you explain why the ECB is moving ahead with it and what practical impact it could have for citizens, households and businesses?

First, let me clarify that we have not yet issued a digital euro and we will not do so until we have the legislation in place.

Having said that, we think that issuing the digital euro is a good idea, especially for citizens. It will preserve their freedom to pay with money issued by their central bank – their money. And today cash cannot be used in many cases – for example, when paying online. The digital euro would let you keep the benefits of cash for those use cases where central bank money cannot currently be used. In short, with the digital euro we are creating a digital version of cash.

For citizens, the major advantage is simplicity. With one piece of hardware, you can pay everywhere in Europe, in all use cases – it is simple and gives you the freedom to pay how you want. For businesses, especially for small businesses like those that make up the backbone of the Cyprus economy, the digital euro will help them save money. This is because with the digital euro the cost of accepting digital payments will be much lower than it is today.

If citizens already pay digitally using private mobile wallets, why do we need a central bank digital currency?

First of all because the market is very fragmented. If you want to cover all your needs, you need several pieces of equipment. This means that, if you want to pay, some solutions don’t work online, some solutions don’t work in shops – and so you have to carry them all with you to ensure you can pay in all scenarios. The digital euro will give you one instrument that allows you to pay everywhere. There is additional functionality that is not available today – for example, an offline solution that will allow you to pay with digital euro even when there is no electricity and you aren’t connected to the internet.

So, to answer your question: we need it because of its simplicity and its coverage of all use cases online and coverage of additional use cases with the offline solution. It is very advantageous for consumers.

Although, if I may, there is something in this point that we should bear in mind – we sometimes speak too much about consumers, but we shouldn't forget that consumers are also citizens, and as citizens we should all be concerned about the resilience of the means of payment we use.

At the moment, almost 70% of card-initiated transactions, are processed by non-European companies. This speaks to the resilience issue – you hear all this talk about strategic autonomy and resilience and yet for something as fundamental as payments we rely mostly on non-European companies. As European citizens, we should be concerned about this. With the digital euro we will solve this problem.

Why would a digital euro matter to a small, bank-based economy like Cyprus?

It will be very advantageous, especially for Cyprus. Today, you have to use non-European means of payment. And this doesn’t come for free. Accepting payments via international card schemes is expensive, especially for smaller merchants. We can estimate that, especially for small businesses, it costs three to four times as much as it would for a larger merchant.

The digital euro would significantly reduce this cost because the ECB will not charge any scheme fees. So, we reduce the cost of the transaction and the merchants benefit. Moreover, because there is an alternative option for accepting digital payments, smaller merchants will gain some strength in negotiations when it comes to private solutions. This is competition.

Why is the ECB moving ahead now, at a time when other central banks have postponed or even abandoned plans for a central bank digital currency?

Well, first of all, it is not clear that all others have abandoned or postponed it. It depends on the central bank. But it is important that we think about ourselves and look to our needs. The ECB is responsible for providing means of payment in Europe and for ensuring the resilience and the reliability of the payment system.

We have to ask ourselves: are these conditions met in Europe today? As I said before, the situation is currently so fragmented that these conditions are not always met. These are the needs we have in Europe, and we need to act now. If we waste time – if we keep spending time thinking about other people – our situation and our dependency on non-European payment providers will deepen and we will end up in a worse position.

Where do we currently stand with introducing the digital euro, and what are the key milestones ahead?

There are two dimensions here. The internal dimension – the preparedness dimension that is the responsibility of the ECB and the Eurosystem – and then there is the legislation side.

On the legislation side we are now progressing well. The original proposal from the European Commission was issued in June 2023. In December last year, the Council of the European Union reached an agreement that is pretty close to the Commission’s original position. Now we are waiting for the European Parliament to come to a decision.

According to the latest proposed schedule, in May they should be able to vote for a position, and we know that they are actively discussing the amendments. So hopefully by May we will have a position from Parliament. Then they will be able to negotiate and hopefully by the end of the year we will have the legislation.

We are already working to be prepared to be able to issue the digital euro, if the legislation is in place, by mid-2029. In the meantime, we will start a pilot in 2027 – this means we will then start initiating some payments on a pilot basis.

But we have to wait until 2029 for the currency to be released?

Think of it this way: to actually produce the infrastructure and to be able to issue, it will take us as much time as the legislator needs for the legislation.

Banks have expressed concerns that the digital euro could affect their liquidity through deposit outflows. How is the ECB addressing these concerns?

This is something we have been thinking about from the very beginning. Obviously, because – as you can imagine – the stability of banks is a major concern for the ECB, as our monetary policy transmits via banks. We built in some safeguards from the outset.

First, the digital euro will not be remunerated, so there is no incentive for people to move money out of their bank account and into their digital euro account.

Second, you won't need to have the money in your digital euro wallet to make a payment because we will have a waterfall solution in place. Put simply, this means that whenever you make a digital payment with digital euro, the money will be downloaded from your bank account, put in the digital euro wallet and, from there, paid to the recipient. You won't need to prefund it.

Will this be online or offline?

Online, which will be the larger use case. For offline, obviously, you need to have the money in the wallet beforehand.

As a third point, to continue my previous answer, there will be holding limits.

And fourth, only physical people can have the digital euro, not merchants. This will also reduce demand. We have run simulations on this and in our analysis, even for relatively high holding limits, we don't see any financial instability.

This is public knowledge. We published a report that we sent to the European Parliament which clearly shows that this is the case. Financial stability is not endangered.

How much will the holding limit be?

We don't know yet. That is still to be discussed. There is a robust process for that, which involves the European Central Bank, the European Commission and the Council.

It will be a comprehensive, clearly articulated process to ensure that nobody can make a sudden decision to change the holding limit. It will be a very robust process that will have at its centre exactly the point you were raising: reassurance that financial stability will be maintained.

So besides financial stability, trust is important for success or failure of the project. What guarantees can you give citizens on privacy and data protection?

We have built the whole project around privacy. Why is this? Because at the very beginning of the process, we looked into people’s expectations. We heard two things: privacy and resilience. Those were the major concerns that people raised.

We have built the system around that. How do we ensure that privacy is protected? For the online solution, we will not have people’s data. We will not know who is paying whom. All the ECB will see is encrypted codes that represent the payer and the payee, but we will not be able to identify the individuals behind these codes. The information stays with the banks, very much like today. The ECB will not know any data. This is for the online solution.

For the offline solution, only the payer and the payee will know the transaction details because a concrete transfer of money will take place between their devices. This is the highest level of privacy that you can get for the current technology. We are on the frontier, so obviously we implement solutions as they develop.

And a question on monetary policy. With the euro strengthening against the dollar, does this give the ECB more room to cut interest rates, or is the exchange rate not a driver of policy decisions?

We do not have a specific target for the exchange rate. Obviously, we take into account the exchange rate as an input in our projections. This is part of all the range of inputs that we take into account to project inflation dynamics. And we will see how the new projections match and the impact this will have.

The euro has appreciated at the beginning of 2026. It has been bunching around 1.18, 1.17 against the dollar for almost a year now. After the episode we saw a couple of weeks ago it is now back to levels seen in previous months.