ECB Digital Euro Strategy: Tokenisation and the Future of Central Bank Money
The ECB's Piero Cipollone outlines how a digital euro and tokenised settlement infrastructure aim to preserve the singleness of money amid digital transformation.
Source: ECB
The ECB is positioning central bank money at the centre of a rapidly digitising financial system. In an October 2026 speech, Executive Board member Piero Cipollone argued that the question is no longer whether payments and finance will go digital, but how to keep money trustworthy, stable and unified through that shift.
Key Facts
Europe currently lacks a digital payment solution that works across all euro area countries and use cases. Two-thirds of card payments rely on international schemes, and 13 of 21 euro area countries have no domestic card scheme. Where domestic solutions exist, they often cannot scale cross-border without co-badging with international networks. Cross-border transactions represent only about 5% of the market.
The ECB's response has two tracks. For retail, it is preparing a digital euro: a digital form of central bank money for everyday payments, usable online and offline for person-to-person transfers, e-commerce and physical shops. The ECB would not serve end customers; banks and regulated payment providers would distribute it, manage relationships and build added services. The Eurosystem would bear core infrastructure costs and charge no scheme or processing fees.
For wholesale markets, the ECB is developing Pontes to let central bank money settle tokenised transactions, and Appia to help shape the wider tokenised finance ecosystem with market participants.
On stability, the digital euro is designed as a means of payment, not an investment: no remuneration, holding limits, and waterfall mechanisms linking holdings to commercial bank accounts so large payments draw the difference from a bank deposit.
Analysis
Cipollone's framing is notable for what it is not. This is not a bid to displace commercial banks or private payment innovation. It is an attempt to preserve the two-tier monetary system in which public and private money coexist, with central bank money acting as the ultimate risk-free settlement asset that anchors convertibility at par.
That anchor matters for monetary policy transmission and financial stability. If tokenised finance develops on closed, incompatible platforms without a safe settlement asset, fragmentation could weaken the singleness of money, meaning one euro might not always equal another. The ECB also warns that excessive dependence on foreign infrastructures erodes resilience and monetary sovereignty.
The economic model is deliberately market-friendly: public infrastructure, open standards, no scheme fees, and reuse of existing European technical standards with bodies such as the European Card Payment Cooperation, nexo standards and the Berlin Group. The ECB has also welcomed a private interoperability platform allowing solutions to share customers, while noting it does not expand domestic acceptance or use cases.
Implications
For banks and payment providers, the digital euro could function as a common acceptance layer and a platform to scale their own offerings, potentially lowering adoption costs through co-badging. For investors, the signal is that European payments infrastructure is becoming a policy priority, with implications for card networks, fintechs and settlement providers. For policymakers, the design choices around holding limits and non-remuneration are explicit safeguards against deposit flight, addressing the main financial stability objection to central bank digital currency. The legislative process will determine final arrangements, including compensation for distributors.
FAQ
What is the digital euro?
It is a digital form of central bank money for everyday retail payments across the euro area, distributed by banks and payment providers rather than the ECB directly.
Will it replace cash or bank deposits?
No. It is designed to complement cash and private solutions, with holding limits and no remuneration to discourage use as an investment and reduce deposit-flight risk.
What are Pontes and Appia?
Pontes is the ECB's initiative to settle tokenised wholesale transactions in central bank money; Appia is its collaborative work with the market to shape the broader tokenised finance ecosystem.