ECB Cautions Europe Must Act Without Private Solutions as Cash Usage Declines – Is CBDC the Solution?

Piero Cipollone from the European Central Bank has heightened his warnings that Europe cannot postpone its digital euro initiative while awaiting alternatives from the private sector, pointing out that cash usage is expected to drop to just 24% of daily transactions by value in 2024, a decrease from 40% five years ago.

In an interview with El País on January 22, the ECB Executive Board member contended that the central bank needs to modify its payment infrastructure as technological changes increasingly leave Europeans reliant on non-European providers for digital transactions that now dominate the economy.

This urgency arises as geopolitical tensions reveal weaknesses in Europe’s payment systems, with recent incidents demonstrating how foreign control over financial infrastructure can be weaponized.

While Cipollone refrained from presenting the digital euro solely as a defensive strategy, he admitted that “all these potential geopolitical tensions and the weaponization of every conceivable tool clearly heighten the level of risk” and bolster the argument for a system fully controlled by Europe.

Source: Bloomberg

Cash Decline Forces Central Bank Adjustments

Cipollone elaborated that e-commerce now represents over a third of daily transactions by value, yet central bank money cannot be utilized for these purchases.

“We provide both retail and wholesale payment solutions,” he stated. “At the retail level, we offer cash – but it doesn’t fully meet people’s needs, as it cannot be used for digital payments.”

The ECB representative underscored that this signifies a rapid transformation rather than stable circumstances.

A decade ago, cash prevailed and met nearly all consumer demands, but technological advancements have significantly changed payment behaviors.

“The capacity to use central bank money for retail transactions is diminishing swiftly,” Cipollone remarked, describing the digital euro as merely adapting to this new landscape by supplementing banknotes and coins with a digital counterpart.

Technical preparations are finalized following the ECB’s completion of a two-year preparatory phase in October 2025, with President Christine Lagarde confirming last month that “we have done our work, we have carried the water.”

ECB President Christine Lagarde stated that the digital euro is technically prepared and now awaits legislative endorsement.#ECB #DigitalEuro #EUStablecoinhttps://t.co/4cdYV6UdSJ

— Cryptonews.com (@cryptonews) December 19, 2025

The responsibility now resides with the EU institutions to finalize the legislation, with Cipollone previously indicating that pilot transactions could commence in mid-2027, and the initial issuance could occur in 2029 if lawmakers ratify the framework this year.

Private Sector Solutions Deemed Inadequate

The ECB has rejected proposals from certain European Parliament members suggesting that authorities delay action while the banking sector develops pan-European payment alternatives.

Cipollone stated that the central bank has long advocated for private solutions and welcomes integration efforts, but emphasized that the digital euro itself will likely expedite the private sector’s establishment of continental systems.

As legal tender, the digital euro would mandate any merchant currently accepting digital payments to also accept it, establishing a unified public standard across all European merchants.

“Currently, when a payment service provider (a bank or fintech) offers services to a merchant, the merchant must comply with its standards,” Cipollone clarified. “With the digital euro, there will be one single, open standard, which will also be accessible to the private sector.”

He strongly criticized the notion that the digital euro should launch solely in offline mode, questioning how such an approach could resolve the lack of viable European payment methods for e-commerce.

“How can an offline solution be utilized for payments in the e-commerce realm? I don’t know,” Cipollone remarked.

Geopolitical Influence Reveals Infrastructure Weaknesses

Recent occurrences have highlighted the dangers of foreign control within Europe’s payment systems.

According to a report by Cryptonews, Cipollone referenced International Criminal Court judges whose U.S. cards were blocked by Visa and Mastercard, restricting their ability to make payments throughout Europe.

“With a digital euro, they could have continued to transact across the euro area,” he noted in a separate interview with Süddeutsche Zeitung.

Seventy European economists echoed these concerns in an open letter dated January 12, warning that thirteen euro area countries currently rely entirely on international card schemes for fundamental retail transactions.

“This reliance on foreign (U.S.) payment providers exposes European citizens, businesses, and governments to geopolitical leverage, foreign commercial interests, and systemic risks beyond Europe’s control,” the academics stated, insisting that the digital euro should serve as “the backbone of a sovereign, resilient European payment infrastructure.”

Seventy European economists caution that a poorly designed digital euro could leave Europe dependent on U.S. payment systems and dollar-backed stablecoins.#DigitalEuro #EU #Stablecoinhttps://t.co/FqcWLtAyEG

— Cryptonews.com (@cryptonews) January 12, 2026

The weaponization of payment systems gained new significance when President Trump’s tariff threats on January 19 against eight European nations concerning Greenland triggered $875 million in cryptocurrency liquidations within 24 hours, demonstrating how geopolitical tensions can rapidly affect financial markets.

While Cipollone refrained from directly addressing U.S. political matters when queried about Federal Reserve Chair Jerome Powell’s independence, he stressed that the ECB focuses solely on inflation targeting within the euro area.

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