Interview with ECB official on digital euro and monetary policy

On February 6, 2026, an interview was conducted with Piero Cipollone by Thalia Neophytou regarding the European Central Bank’s (ECB) digital euro initiative.

The ECB has not yet issued a digital euro and will do so only after legislation is in place. The digital euro aims to preserve citizens’ freedom to pay with central bank money, especially online, creating a digital version of cash.

The digital euro offers simplicity and universal coverage, including offline payments when there is no internet or electricity. It addresses market fragmentation and enhances resilience by reducing reliance on non-European payment providers, which process nearly 70% of card transactions.

For small economies like Cyprus, the digital euro could lower costs for merchants, as international card scheme fees are expensive. It would also increase competition and bargaining power for small merchants.

The ECB is moving forward due to the need to ensure payment system resilience and to act promptly, as other central banks have delayed or abandoned plans. Legislation development is progressing, with a legislative decision expected by the end of 2023 and readiness to issue the digital euro by mid-2029. A pilot program will begin in 2027.

Concerns about bank liquidity are addressed through safeguards: the digital euro will not be remunerated, payments will be made via a waterfall process from bank accounts, and holding limits will be implemented. Only individuals, not merchants, can hold digital euro accounts, reducing demand and risk.

Privacy is a core principle; online transactions will be encrypted and not reveal user identities, with data remaining with banks. Offline transactions will be visible only to payer and payee, ensuring high privacy standards.

The ECB does not target exchange rates but considers them in inflation projections. The euro has appreciated against the dollar at the start of 2026, but this does not directly influence monetary policy decisions.