Digital euro: Cipollone outlines conditional 2029 issuance plan

Piero Cipollone has outlined a conditional path towards a first digital euro issuance in 2029, with a 12-month pilot planned to begin in the second half of 2027. In a speech published on 6 October 2026 by the European Central Bank (ECB), the executive board member said the timetable assumes legislation is completed by the end of this year; the bank’s Governing Council would decide whether to issue the currency only after that legislation is adopted.

The speech, “Money in the digital age: digital euro, tokenisation and the role of central banks”, connects the proposed everyday payment instrument with two wholesale-finance initiatives, Pontes and Appia. Cipollone presented them as complementary efforts to maintain access to public money while allowing banks and other private providers to develop digital services.

The dates, programme details and modelling findings below are those set out in the institution’s speech, rather than independently verified outcomes. The publication is available at https://www.ecb.europa.eu//press/key/date/2026/html/ecb.sp261006~0da978f159.en.html.

A common payment network, distributed by private providers

Cipollone’s case for a digital euro rests partly on Europe’s dependence on payment networks controlled outside the region. He said international schemes handle two-thirds of euro area card payments and that 13 of its 21 countries have no domestic card scheme. Existing European solutions, he argued, do not collectively cover every country and major everyday payment setting.

The proposed digital euro would complement cash and private payment services, operating both online and offline. Its intended uses include transfers between people, online purchases and payments in physical shops. Cipollone said its envisaged legal-tender status would give it acceptance wherever digital payments can be made across the euro area.

Banks and regulated payment service providers—not the central bank—would handle distribution, customer relationships and additional services. They could incorporate the digital euro into their existing cards or apps, using it where their own payment solutions lack coverage.

The speech reports agreements with European Card Payment Cooperation, nexo standards and the Berlin Group to reuse existing technical standards. The aim is to reduce adoption costs rather than require providers to build entirely separate acceptance systems.

Under the proposed economic model, the Eurosystem would pay for establishing and running the core infrastructure and levy no scheme or processing fees on digital euro transactions. Providers would receive compensation for their services, although the arrangements remain under legislative discussion. That proposal is not a settled promise that every service associated with the digital euro would be free.

Holding limits remain undecided

To address concerns that a digital euro could draw deposits away from banks and constrain lending, the design would make it a payment instrument rather than an interest-bearing investment. Individual holdings would be capped, but no final cap has been chosen.

Users could link their digital euro holdings to a commercial bank account. Payments larger than their digital euro balance could draw the shortfall from that account, while incoming funds above the holding ceiling—or a lower threshold selected by the customer—could automatically move into the linked bank account.

Cipollone cited an assessment requested by the European Parliament covering 2,025 banks and hypothetical limits ranging from €500 to €3,000. The speech references the institution’s October 2025 publication, “Technical data on the financial stability impact of the digital euro”. The exercise examined ordinary conditions and an extreme flight-to-safety scenario.

Under ordinary conditions, the analysis projects a potential €127 billion increase in bank deposits by 2034 as people shift from cash towards deposit-based payments. That forecast inflow, equivalent to 0.4% of banking-sector assets or 1.5% of retail sight deposits, would exceed estimated aggregate digital euro-related outflows at all holding limits assessed. It is a modelled future shift, not money already received by banks.

Even excluding that projected inflow, a €3,000 cap would reduce the aggregate liquidity coverage ratio from 166% to 163% and the net stable funding ratio from 128% to 127%, according to the assessment cited in the speech.

In the extreme scenario, aggregate regulatory liquidity measures remained above 100%. At a €3,000 limit, 13 banks representing 0.3% of sector assets would see their liquidity coverage ratio reach 100%; nine of those, accounting for 0.1% of assets, would risk falling below that level.

These results depend on the exercise’s assumptions. The stress scenario assumes no monetary-policy response, even though such a crisis would normally prompt consideration of action. Cipollone described the figures as illustrative, not a decision on the eventual holding limit.

Legislation first, then a potential launch

According to the speech, the Council of the European Union adopted its negotiating position in December 2025 and the European Parliament followed in July 2026. Negotiations between the institutions were under way, with the European Council seeking their conclusion by the end of 2026.

Preparatory work includes 36 payment service providers selected for the pilot from more than 50 applicants. A call opened on 15 September for online and mobile-commerce merchants to participate. Testing would cover checkout integration, customer payment journeys and user experience, alongside the underlying technology.

A separate innovation programme is exploring electronic receipts, payments with multiple senders or recipients, conditional payments and additional app functions. Longer-term work includes possible AI-enabled payments, micropayments and public-service uses such as transport and parking. These are areas for experimentation, not a list of confirmed launch features.

Pontes and Appia address tokenised markets

For wholesale finance, Cipollone focused on tokenisation: representing financial assets digitally so that activities such as issuance, trading, settlement and servicing can operate in a shared environment. Smart contracts can automate tasks, while atomic settlement means that the cash and asset sides of an exchange complete together—or neither completes.

He described Pontes as an operational service connecting market distributed-ledger platforms with Eurosystem services so tokenised asset transactions can settle in central bank money. Further development is expected to culminate in full implementation by mid-2028, with plans for round-the-clock service, greater programmability and multi-currency capability.

Appia has a different purpose: developing the architecture, standards and governance for a more integrated tokenised financial system. Its remit includes interoperability between assets, collateral management, cross-border transactions, resilience and compatibility with the legal framework. A blueprint is targeted for 2028.

The Appia roadmap consultation received 127 responses, with 90% of respondents offering at least one proposal to contribute, according to the speech. A contact group of 61 entities, selected from more than 100 applicants, is intended to provide continuing market input.

Cipollone argued that central bank settlement money should support rather than displace tokenised commercial bank deposits. The objective is to let deposits issued by different regulated banks exchange at equal value across networks, instead of becoming isolated tokens on incompatible platforms. His warning was that fragmentation could favour the largest international bank and deepen reliance on foreign infrastructure or foreign-currency settlement assets.