Piero Cipollone: Money in the digital age: digital euro, tokenisation and the role of central banks

Speech by Piero Cipollone, Member of the Executive Board of the ECB, MNI Connect Webcast

For centuries, issuing money and safeguarding its value has been at the heart of central banks’ mandate.

But the technological environment is changing.

People increasingly pay digitally. Financial institutions are experimenting with distributed ledger technology (DLT). Assets are being represented as digital files, or tokens. New actors have entered markets traditionally served by banks.

This transformation opens up significant opportunities.

It can make payments more convenient and finance more efficient. And it can pave the way for new products and business models.

If we do not provide a digital form of cash, the role of public money may continue to decline. And we may find ourselves trapped in a situation where there is no pan-European digital payment solution that caters to every type of day-to-day transaction.

If tokenised finance develops on closed, incompatible platforms without a safe settlement asset, fragmentation could increase and the singleness of money could be weakened.

And when Europe excessively depends on infrastructures, technologies or solutions controlled elsewhere, our resilience and monetary sovereignty is diminished.

The question, therefore, is not whether payments and finance will become more digital. They already are.

The question is how we can ensure that our monetary system continues to preserve the singleness of money, trust and stability, while also supporting efficiency, resilience and autonomy as this transformation unfolds.

Our answer is to extend central bank money into the digital environment while preserving the two-tier monetary system in which public and private money coexist.