Welcome address by Piero Cipollone, Member of the Executive Board of the ECB, at an event hosted by the Deutsche Bundesbank for central bank representatives attending the Sibos conference
Almost exactly one year ago, I gave a speech - also here at the Bundesbank - outlining a vision for the future of digital finance and the role of central bank money in this new ecosystem.[1] Cipollone, P. (2024), "Towards a digital capital markets union", keynote speech at the Bundesbank Symposium on the Future of Payments, 7 October.
Fast forward 12 months, and the pace of transformation seems to have quickened even more. Innovative digital payment solutions and digital assets are receiving increasing attention, with market participants scrambling to position themselves favourably to ensure they do not miss out. The opportunities and risks are being discussed at length.[2] See BIS (2025), "The next-generation monetary and financial system", BIS Annual Economic Report 2025.
So what does this mean for central banks? Today, I will argue that we need to innovate to keep central bank money at the technological frontier so that it can continue to act as an anchor of trust and stability for the financial system. I will also discuss the implications for retail, wholesale and cross-border payments.
Keeping central bank money at the forefront of technology to preserve its role as an anchor of trust and stability
Our vision has not changed: central bank money must remain the anchor of trust and stability at the heart of the financial system. In retail transactions, cash provides immediate and risk-free settlement directly between the payer and the payee. In wholesale markets, settlement in central bank money eliminates counterparty risk and provides finality in large-value transactions. In both cases, trust in private money relies on its convertibility with central bank money.
In other words, central bank money is the glue that holds the singleness and unity of our currency in place and secures the integrity of our financial system. And as finance becomes increasingly digital and new technologies emerge, we must adapt to ensure that central bank money remains reliable and available. This is the only way we can stay true to our mandate of issuing central bank money - the only risk-free settlement asset - and ensure that payment systems function smoothly. It will also encourage digital innovation and keep it safe.
I know that many of you share the Eurosystem's vision and - like us - are working hard to make it a reality. For central bank money to keep its stabilising and unifying role in the future of finance and payments, it must stay at the forefront of technology. This is the pre-condition for preserving the balance between public and private money that has served us well until now.
Implications for retail, wholesale and cross-border payments
Within the Eurosystem, we have considered the implications of the digital transformation for our own role in retail, wholesale and cross-border payments.
Retail payments
With everyday retail payments becoming increasingly digital, the role of physical central bank money - cash - is being reduced, creating risks to competition, inclusion, resilience and monetary sovereignty. And for the euro area, the risk to integration is particularly concerning - cash as the legal tender has always provided a means of payment that can be used everywhere across our monetary union. This is why we are working on a digital euro.[3] Cipollone, P. (2025), "The digital euro: legal tender in the digital age", introductory statement at the Committee on Economic and Monetary Affairs of the European Parliament, Brussels, 14 July, and Cipollone, P. (2025), "The digital euro: ensuring resilience and inclusion in digital payments", introductory statement at the Committee on Economic and Monetary Affairs of the European Parliament, Brussels, 4 September.
But we have not forgotten about banknotes: we are still working on making them safer, more durable and more accessible. We are redesigning them to ensure they remain relatable. And we are advocating a strengthening of their legal tender status to ensure they continue to be widely accepted.[4] See Cipollone, P. (2025), "Making euro cash fit for the future", The ECB Blog, ECB, 4 August.
Wholesale payments
The starting point for wholesale payments is different, because central bank money already exists in digital form and plays a central role. In the euro area, T2 is used to settle over 90% of the value of large payments between financial institutions. TARGET2-Securities has harmonised securities settlement in central bank money across borders. And the new Eurosystem Collateral Management System has just gone live, providing a harmonised platform for collateral operations across the euro area. We are also preparing for the move to T+1 settlement by 2027 to reduce counterparty risk, and are learning from the experiences of those of you who have already done so.
Our challenge today is to preserve the centrality of central bank money for wholesale settlement as new technologies emerge. Not because we are selfishly or ideologically trying to protect our own role, but because we want to avoid reintroducing credit risk or liquidity fragmentation into the system. As we are being told by market participants themselves, this is crucial for digital asset markets to develop confidently and safely. It is also in keeping with the principles for financial market infrastructures.[5] Bank for International Settlements (2012), Principles for financial market infrastructures, April.
Although the full potential and limits of these new technologies - and thus the pace and magnitude of their adoption - remain uncertain, we cannot ignore them. If we take the film industry as an analogy, the switch from DVD to Blu-ray marked a significant improvement. However, as the internet became faster and more widely available, a true paradigm shift occurred: streaming emerged and more or less completely replaced physical media in providing access to digital content.
We cannot exclude that a similar shift might happen with the digitalisation of finance, Markets are already experimenting with tokenised securities and distributed ledger technologies (DLT)[6]
