Digital Euro May Strengthen Europe's Financial Sovereignty

Member of the Executive Board of the European Central Bank, Piero Cipollone, stated that the digital euro will help Europe reduce its dependence on non-European payment systems. In an interview with Milano Finanza on October 24, he noted that critical dependence on third-party providers creates strategic vulnerability.

"In recent years, Europe has realized that for some vital services, we cannot rely solely on third parties," Cipollone said. Sovereignty, according to him, does not mean closing off from third parties: it is the ability to choose and know that Europe can rely on its own strengths.

The pilot is scheduled for 12 months and will begin in the second half of 2027. It involves 36 payment service providers, including seven from Italy. The pilot itself will be conducted by ECB staff and 19 national central banks on a beta version: transfers between people, purchases in stores, and payments through online platforms. Applications from online merchants are accepted until October 27. The beta will not have the status of legal tender.

The ECB's Governing Council will be able to make a decision on issuance only after the completion of legislative negotiations. "We hope that the regulation will be adopted by the end of the year," Cipollone said. If the law is passed this year, the ECB expects to be technically ready for launch in 2029.

In Italy, online payments accounted for 24% of all payments in 2024 compared to 6% in 2019, and two-thirds of them go through non-European card schemes. In many eurozone countries, there are no national networks comparable to Italy's Bancomat, so merchants depend on international providers even in physical stores. Small business fees for payment processing can be up to four times higher than those of large businesses; the digital euro will introduce legislatively established fee caps.

Payments can be made without the internet, even during power outages: just bring two devices close to each other, as with contactless payment. Access will be through banking apps or a separate Eurosystem app, with identity verification and compliance checks for online payments continuing to be handled by banks. Wallets will have storage limits to protect financial stability, but spending will not be restricted: if a purchase exceeds the balance, the remainder will be deducted from the linked bank account.