By Laura Contemori – ROME (Econostream) – European Central Bank Executive Board member Piero Cipollone said on Thursday that central banks should embrace the digitalization of money and payments while preserving safety, uniformity and reliability.

In a speech at the Italian international relations think tank Istituto Affari Internazionali in Rome, Cipollone identified three main challenges: the lack of a European digital means of payment that works across the Eurozone for retail transactions, the absence of tokenized central bank money, and cross-border payments that remain too slow and expensive.

To address these issues, he said the ECB is preparing for the possible issuance of a digital euro, the settlement of distributed ledger technology (DLT)-based transactions as of September 2026, and the interlinking of fast payment systems.

“The role of central banks is not to replace the private sector. Instead, we must ensure that public money continues to anchor the financial system as technology evolves,” he said.

“The digital euro is designed as a payment instrument, not as an investment product. We envision it as part of a broader public-private payments ecosystem,” he added, noting that it will not bear interest and that there will be a cap on individual holdings.

The digital euro would also have legal tender status. Cipollone said the ECB had signed agreements with the European Card Payment Cooperation, nexo standards, and the Berlin Group - three European standard-setting organizations - to reduce adoption costs for the market.

A pilot phase, along with initial transactions, could begin as early as mid-2027, while a first issuance of the digital euro could take place in 2029, he said.

Regarding a tokenized euro for wholesale transactions, Cipollone said, [I]n the Eurosystem, we believe that all forms of tokenized private money will benefit from the availability of tokenized central bank money.”

“With a larger market, demand for all forms of tokenized settlement assets, including private ones, will increase,” he added. To enable the settlement of tokenized asset transactions in central bank money, the ECB is connecting DLT-based market platforms to TARGET services, with availability expected in the third quarter of 2026.

The ECB also aims in 2028 to present a blueprint for the Appia project, published earlier in 2026, he said.

Regarding cross-border payments, Cipollone said the ECB is “working on interlinking fast payment systems available in many other countries, including outside the European Union,” allowing payments to move more smoothly across borders without compromising monetary sovereignty, as could happen with the spread of stablecoins.

“The private sector will continue to drive innovation,” he concluded. “By modernising central bank money where needed and making sure it is available across all domains, the public sector must make sure that it continues to be the anchor underpinning the financial system.”