Digital Money Takes Over as Just 24% of Euro Payments Are in Cash, European Central Bank Says

The European Central Bank (ECB) is now advancing its digital euro project, hoping to restore control over retail payments while enabling innovation in both consumer and wholesale transactions.

In a speech by Piero Cipollone, a Member of the ECB's executive board, the initiative reflects mounting concerns that Europe’s reliance on non-EU payment platforms threatens its financial independence and its ability to shape the future of money.

The Decline of Cash and the Case for a Digital Euro

The ECB has acknowledged a visible shift in consumer behaviour: while cash once served as the anchor of everyday transactions, its role is rapidly fading. In 2023, only 24% of retail payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl Read this Term in the euro area were made using cash.

Meanwhile, foreign digital payment services like PayPal, Apple Pay, and Alipay dominate much of the digital landscape, with almost two-thirds of euro area card transactions processed by non-European providers.

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The digital euro would act as a secure, universally accepted currency in digital form. It would offer offline functionality, privacy similar to cash, and legal tender status. Cipollone emphasized that consumers want it, pointing to surveys showing growing interest across member states.

The ECB sees the digital euro not just as a monetary tool, but as a way to rebalance the relationship between European merchants, banks, and foreign platforms. By introducing a digital euro, the ECB aims to support European payment providers in scaling their offerings across borders.

Digitizing Wholesale Finance With DLT

While retail payments have received most of the public attention, the ECB is also preparing for sweeping changes in wholesale finance. Here, the focus is on integrating distributed ledger technology (DLT) and tokenisation into financial markets.

The ECB’s existing systems—like TARGET2 and T2S—already settle the vast majority of wholesale transactions. However, new technologies offer opportunities to streamline trading, settlement Settlement Settlement in finance refers to the process when a buyer makes payment and receives the agreed-upon services or goods. The term is used on exchanges such as New York Stock Exchange (NYSE) when security changes hands. When the asset is transferred and placed in the new buyer's name, it is considered settled. This process could take a few hours or several days after a trade is made. It depends on the clearance process. In the United States, the settlement date for marketable stocks is usually 2 Settlement in finance refers to the process when a buyer makes payment and receives the agreed-upon services or goods. The term is used on exchanges such as New York Stock Exchange (NYSE) when security changes hands. When the asset is transferred and placed in the new buyer's name, it is considered settled. This process could take a few hours or several days after a trade is made. It depends on the clearance process. In the United States, the settlement date for marketable stocks is usually 2 Read this Term, and custody into a single, 24/7 infrastructure.

Tokenised assets and programmable money could enable new business models and lower costs, especially for smaller market participants.

Last year, the ECB conducted a trial with 60 market participants to settle wholesale transactions using DLT. Over €1.6 billion was processed during the six-month test—more than any similar initiative globally.

Cipollone stressed that building an efficient, resilient, and innovative financial ecosystem requires cooperation from across the market. The ECB has begun work on a single rulebook for the digital euro and continues to engage stakeholders from banking, fintech, and merchant communities.