By David Barwick – FRANKFURT (Econostream) – European Central Bank Executive Board member Piero Cipollone said in an interview published Thursday that the legislative text needed for the digital euro should be ready by the end of this year, with the first test payments taking place in less than 12 months.

In an interview conducted September 23, Cipollone told Italian daily Corriere della Sera that a potential first issuance in 2029 was possible, while stressing that the timetable depended partly on European lawmakers.

“Fortunately, we are nearly there: by the end of the year the legislative text should be ready,” he said.

Preparations for the pilot had advanced over the summer, with the ECB selecting 36 participants after receiving nearly 60 applications in May, including from several Italian banks, he said.

“It might seem a long way off, but actually the pilot project was launched in the summer and the first tests will start next year, with the first payments being made in less than 12 months,” he said.

Cipollone said geopolitical developments had helped accelerate the project, with Russia’s invasion of Ukraine drawing attention to European dependencies extending beyond energy.

“Without our own digital payment system, we are at the mercy of other operators,” he said.

The digital euro would give merchants a public alternative to existing payment providers and could cut the cost of accepting digital payments in half for small businesses, Cipollone said. Merchants often had little choice among providers and faced fees that were both high and opaque, reducing already narrow margins and feeding into prices, he said.

European private payment solutions could incorporate the digital euro, allowing them to operate throughout the euro area, Cipollone said. Italy’s Satispay and Bancomat were already participating in the ECB’s work, he added.

He said the digital euro would complement rather than replace cash, provide comparable security and be free for individuals. People without a phone would be able to use a card, while offline payments would permit transfers directly between devices without an internet connection or intermediaries, he said.

The digital euro would have to be accepted by every merchant that accepts digital payments, Cipollone said, adding that its introduction needed to be integrated easily into businesses’ normal system update cycles.