Interview with Piero Cipollone, Member of the Executive Board of the European Central Bank, conducted by Francesco Ninfole on 24 September 2025
The ECB launched an innovation platform with 70 partners to collaborate on the digital euro. What results has it produced and what will the next steps be?
Our innovation platform brought together universities, fintechs, start-ups, banks and retailers. The results have been very encouraging. Collaboration has shown that the digital euro can improve people's daily lives and offer them new services. For example, we could make on-delivery payments online, or issue digital receipts that can make consumers' lives easier when returning a product or activating the guarantee on a purchase. We will present the fruits of this research at Bocconi University tomorrow. We're just getting started. There are still myriad ideas to explore, and numerous companies, banks and research institutes have asked us to explore the innovation potential of the digital euro. We want to continue this dialogue with the market to promote the development of novel solutions. To that end, over the coming months we will organise a second round of collaboration with the private sector.
Many people are still unclear about the benefits of the digital euro compared with existing means of payment. What are its biggest advantages?
Today cash offers a secure and free means of payment, which is always available, guarantees privacy and is accepted across the euro area. People love cash, and we here at the ECB must ensure that everybody has the option to pay with coins and banknotes. That's why we launched a competition this year to redesign and modernise the euro banknotes. But with the rise of digital payments, we risk losing the advantages of cash as we become increasingly reliant on private non-European systems to make day-to-day payments. This seriously limits our freedom to choose how to pay and our strategic independence. With the digital euro, we want to make sure that we also retain the benefits of cash in the digital era: we will make available a free means of payment for the most common use cases, which protects privacy and is accepted across the euro area wherever digital payments are accepted. In addition, the digital euro will offer businesses a simple and affordable alternative for accepting digital payments. This will help to reduce fees, which are currently on an upward trajectory due to the lack of competition between the major card schemes, hitting smaller businesses particularly hard. Lastly, it will be possible to use the digital euro both online and offline, and pay even if there is no internet connection. This offline solution is particularly useful for payments in remote areas or in case of emergency related to a natural disaster or disruption caused by a cyberattack.
When can we expect an agreement to be reached between the European Parliament and the Council of the European Union and actual use of the digital euro by Europeans?
The ECB can decide to issue the digital euro only after it has been approved by the European legislators. Last week, during the informal meeting of economic and financial affairs ministers in Copenhagen, the President of the Eurogroup, Commissioner Dombrovskis and many European finance ministers called for the EU Council to reach a consensus by the end of the year. It would appear that the European Parliament intends to set out its own position by spring 2026. The trilogue can then begin. Once it is concluded and the definitive regulation has been approved, we will need to give banks and businesses time to prepare to distribute and accept the digital euro. Realistically, the launch would take place around two and a half years after the legislation is passed. If the legislation is ready by the end of 2026, the digital euro will become a reality midway through 2029.
What is your view on the Eurogroup's agreement on setting the ceiling for the amount of digital euro that each individual will be able to hold?
We very much welcome the agreement, which provides guidance on the role and competences of all of the European institutions. It establishes a clear process for defining prior to the launch the maximum that can be held in digital euro to ensure financial stability, which is a goal everyone shares. The unanimous support of the finance ministers shows that the digital euro is seen not just as a means of payment, but as a clear indication of Europe's sovereignty and strategic autonomy, and that the desire is there to quickly turn this vision into concrete measures.
Banks are afraid that the digital euro may lead to infrastructure costs, the loss of payment fees or a reduction in their deposits. What is the ECB's answer to these concerns?
Banks will play a central role in distributing the digital euro, which will enable them to maintain their links with customers and receive compensation for their role. We have introduced safeguards to avoid a loss of deposits that could destabilise the system, such as the maximum holding limit just mentioned, the fact that the digital euro will not be remunerated, and a feature that will enable people to link their digital euro wallets directly to their bank accounts. The latter mechanism will enable customers to make purchases without having first charged up their virtual wallets with the amount of digital euro required to make the purchase. The banks will receive fees for payments in digital euro and we will use existing infrastructure to keep costs down. In short, we want to collaborate, not compete, with the banking sector and provide it with the opportunity to expand its services across the whole euro area and develop innovative products. Banks' real competition comes from emerging players like stablecoins and big tech, not the European Central Bank.
Some people say that rather than create a digital euro, it would be enough to have interoperability between national payment systems, like Bancomat in Italy. What is your view on that?
Interoperability is a step in the right direction, but by itself not enough to overcome the current challenges. Ensuring that people can pay anywhere in the euro area at any time is something that only the digital euro can fully achieve. Choosing exclusively the private route or solely the public one is a false dichotomy: private solutions and public money have coexisted in our wallets for years and will continue to do so. The digital euro will actually help to boost private solutions. By leveraging the standards and infrastructure offered by the digital euro through co-badging, operators such as Bancomat or other private entities will be able to offer payment services on a European scale, for all use cases, more efficiently and at a lower cost.
How could the spread of dollar-denominated stablecoins pose a threat to the euro area? In what way could the digital euro defend against that?
Dollar-denominated stablecoins, which account for 99% of the market, could make European households and firms even more dependent on private, non-European [payment] systems. Widespread use of stablecoins would pose risks to euro area sovereignty, financial stability and monetary policy. It's worth considering that buying stablecoins in dollars in all likelihood means transferring deposits from European banks to US banks. It may seem like a remote risk, but in just over a year, the market has doubled, and analysts are predicting that by 2028 the supply of stablecoins could be close to the current level of GDP in Italy. The digital euro makes sure consumers have a stable and sovereign option, which will allow them to make payments anywhere in Europe for all use cases. European firms can also act as a foundation on which they can build modern, innovative and secure payment services. If Europeans have access to an efficient means of payment in the form of the digital euro, they might be less inclined to resort to stablecoins.
President Christine Lagarde has said that the ECB is "in a good position" regarding interest rates. What conditions might prompt a further cut?
At the last Governing Council meeting, we decided to keep our key interest rates unchanged. The deposit facility rate, through which we steer our monetary policy stance, is 2%. We are in a "good position" in the sense that inflation is currently at our 2% target and our macroeconomic projections do not foresee a significant deviation from this level in the medium term. Inflation expectations are also well anchored.
That said, President Lagarde also made it clear that we are determined to ensure inflation stabilises at our 2% target in the medium term and that we will follow a data-dependent and meeting-by-meeting approach. We will therefore update our assessment based on incoming data at the next monetary policy meeting, and we will have new projections in December. As always, we will take into account all the information available to us rather than focusing exclusively on one specific data point. In line with our strategy, we stand ready to react if inflation is expected to deviate significantly from our 2% target in the medium term.
Do you believe that inflation risks are mainly on the upside or the downside? Under what circumstances could the expected undershoot for next year become a cause for concern?
We believe there are both upside and downside risks to inflation, which are broadly balanced overall. The outlook for inflation remains more uncertain than usual due to the ongoing volatility in the global trade policy environment. On the one hand, the European economy remains relatively robust and growth has been stronger than expected. But we must factor in the possibility that geopolitical and trade tensions could fragment value chains, with possible upward pressure on prices. At the same time, the euro has appreciated in both nominal and real terms, and the EU's decision not to retaliate against US tariffs has significantly reduced the upside risk to inflation. US tariffs could also result in a stronger redirection of trade flows from the United States to the euro area and lower Chinese export prices than currently expected. On the whole, these factors collectively represent a significant downside risk to inflation, which we must monitor closely and weigh against upside risks.
What are the growth expectations for the end of this year and for 2026? When will we see the full effect of US tariffs and to what extent will they weigh on the European economy?
The economy was resilient over the first half of the year, owing to a positive contribution from domestic demand and the frontloading of exports ahead of expected tariff increases. As a result, we have revised our growth forecast for 2025 to 1.2%, up from 0.9% in the June projections.
Looking beyond this year, the economy is projected to grow by 1.0% in 2026 and 1.3% in 2027. The uncertain international environment will remain an obstacle for growth, weighing on net exports, which are projected to shrink next year. The US Administration's investigations into sectoral tariffs on pharmaceuticals, semiconductors and timber are still ongoing, leading to continued uncertainty and downside risks to growth prospects. At the same time, our projections point towards steady growth in domestic demand, supported by rising disposable income, a resilient labour market and increased public investment in infrastructure and defence.
How might a more dovish approach by the Federal Reserve to interest rates influence the ECB's plans?
Central banks conduct monetary policy in line with their respective mandates. That said, we take macroeconomic developments and reactions of other central banks into account to the extent of their possible influence on our medium-term inflation outlook. This, among many other factors, is reflected in our projections.
Some have called for interest rate cuts to counter excessive appreciation of the euro against the dollar. How does the ECB view this risk?
We do not target the exchange rate, but we factor it into our assessment of growth and inflation prospects. When the euro appreciates, all other things being equal, it weighs on net exports, which, according to our projections, will slow growth in 2025 and 2026. In any case, we should take a broader approach to the assessment, as the impact on competitiveness also depends on changes in our competitors' currencies, how their export prices change in relation to ours, and price trends in end markets. We should not overlook the fact that the euro's appreciation also lowers the import prices of commodities billed in dollars, such as oil, and generally makes foreign goods and services cheaper. Our macroeconomic projections support our monetary policy decisions and allow us to account for these effects.
What are the main reasons why the international role of the euro has not yet benefited significantly from the dollar's difficulties?
The euro has remained stable as the world's second most important reserve currency. We have seen a shift away from the dollar and an increase in the share of gold in official global reserves. Research suggests that the primary motivation for this was to diversify the composition of reserves, although a desire to protect against geopolitical risk and uncertainty about the future of the international monetary system also played a role.
If the EU maintains its status as a reliable partner that defends open trade, investor protection, the rule of law and the independence of central banks, the euro has the potential to be a global public good. This requires a deep and reliable market for internationally accepted euro debt securities. Further developing this market would require ambitious policy actions focused on harmonising and integrating the market, as well as issuing European safe assets to fund Europe's response to the challenges it faces.
The ECB can also play a role by providing euro liquidity in times of stress, which helps safeguard the transmission of our monetary policy by preventing forced sales of euro-denominated assets. At the same time, we are exploring the interconnectedness of our fast payment system with those of other jurisdictions to make euro payments faster and cheaper, thereby supporting the use of the euro for trade invoicing.
