ECB Warns Europe Can’t Wait for Private Solution as Cash Use Plunges – Is CBDC the Answer?

The European Central Bank’s Piero Cipollone has intensified warnings that Europe cannot afford to delay its digital euro project while waiting for private-sector alternatives, citing cash use collapsing to just 24% of daily transactions by value in 2024, down from 40% five years earlier.

In a January 22 interview with El País, the ECB Executive Board member argued that the central bank must adapt its payment infrastructure as technological shifts leave Europeans increasingly dependent on non-European providers for digital transactions that now dominate the economy.

The push comes as geopolitical tensions expose vulnerabilities in Europe’s payments architecture, with recent events exposing how foreign control over financial infrastructure can be weaponized.

While Cipollone resisted framing the digital euro purely as a defensive measure, he acknowledged that “all these potential geopolitical tensions and the weaponisation of every conceivable tool clearly increase the level of risk” and reinforce the case for a fully European-controlled system.

Cash Retreat Forces Central Bank Adaptation

Cipollone detailed that e-commerce now accounts for more than a third of day-to-day transactions by value, yet central bank money cannot be used for these purchases.

“We provide both retail and wholesale payment methods,” he said. “At the retail level, we offer cash – but it doesn’t fully cover people’s needs, because it can’t be used to pay digitally.“

The ECB official emphasized this represents accelerating change rather than stable conditions.

A decade ago, cash dominated and met nearly all consumer needs, but technological advances have fundamentally altered payment habits.

“The ability to use central bank money for retail transactions is declining rapidly,” Cipollone stated, describing the digital euro as simply adapting to this new environment by complementing banknotes and coins with a digital equivalent.

Technical preparations are complete after the ECB concluded its two-year preparation phase in October 2025, with President Christine Lagarde confirming last month that “we have done our work, we have carried the water.“

Responsibility now sits with the EU institutions to finalize legislation, with Cipollone previously indicating that pilot transactions could begin mid-2027 and the first issuance possible in 2029 if lawmakers approve the framework this year.

Private Sector Solution Rejected as Insufficient

The ECB has dismissed proposals from some European Parliament members calling for authorities to wait while the banking sector develops pan-European payment alternatives.

Cipollone said the central bank has long urged private solutions and welcomes integration efforts, but stressed that the digital euro itself will likely accelerate the private sector’s development of continental systems.

As legal tender, the digital euro would require any merchant currently accepting digital payments to accept it, creating a single public standard across all European merchants.

“Currently, when a payment service provider (a bank or fintech firm) provides services to a merchant, the merchant has to sign up to its standards,” Cipollone explained. “With the digital euro, there will be one single, open standard, which will also be available for the private sector.“

He sharply criticized suggestions that the digital euro launch only in offline mode, questioning how such an approach could address the lack of viable European payment methods for e-commerce.

“How can an offline solution be used to pay in the e-commerce space? I don’t know,” Cipollone said.

Geopolitical Leverage Exposes Infrastructure Vulnerabilities

Recent events have shown the risks of foreign control in Europe’s payment systems.

According to a Cryptonews report, Cipollone cited International Criminal Court judges whose U.S. cards were blocked by Visa and Mastercard, limiting their ability to pay across Europe.

“With a digital euro they could have continued to pay throughout the euro area,” he noted in a separate Süddeutsche Zeitung interview.

Seventy European economists amplified these concerns in a January 12 open letter warning that thirteen euro area countries now rely entirely on international card schemes for basic retail transactions.

“This dependence on foreign (U.S.) payment providers exposes European citizens, businesses, and governments to geopolitical leverage, foreign commercial interests, and systemic risks beyond Europe’s control,” the academics wrote, demanding the digital euro function as “the backbone of a sovereign, resilient European payment infrastructure.“

The weaponization of payment systems gained fresh relevance when President Trump’s January 19 tariff threats against eight European nations over Greenland triggered $875 million in crypto liquidations within 24 hours, showing how geopolitical tensions rapidly cascade through financial markets.

While Cipollone avoided commenting directly on U.S. political developments when asked about Federal Reserve Chair Jerome Powell’s independence, he emphasized that the ECB focuses exclusively on euro area inflation targeting.