Cipollone: ​​“We need a European payment system that is totally under our control” | Economy | EUROtoday

There is little doubt concerning the hyperlink between cash and geopolitics, and the story of the digital euro solely reaffirms this hyperlink. The European Commission offered the authorized proposals for its growth in June 2023 and there it remained, with out a lot political momentum till Donald Trump returned to the White House. Then the position of Piero Cipollone (64 years previous, Avezzano, Italy), the member of the chief committee of the European Central Bank (ECB) in control of the digital euro, gained in significance. Before arriving in Frankfurt, he spent a part of his profession on the Bank of Italy, the place he rose to deputy governor. In November 2023 he entered the board of administrators that’s in control of the day-to-day operations of the very best financial authority, and went on to direct a key mission with which the EU hopes to scale back dependence on American corporations akin to Visa, Mastercard or American Express for digital funds.

Ask. The ECB has used the present difficult geopolitical scenario as an argument in its favor to defend the digital euro. Do you suppose that the occasions seen for the reason that starting of the 12 months, akin to Venezuela and Greenland, reinforce this place?

Answer. Said like this, it appears that evidently we’re adopting the digital euro as a defensive response in opposition to one thing or somebody. It just isn’t a very right interpretation. The ECB is remitted to offer technique of fee for the fee system. If we have a look at the scenario in Europe, maybe now we have to ask ourselves if these two situations are met; if the fee system is so fragmented that, apparently, you can not pay digitally all through Europe with out relying on non-European suppliers. Then maybe we additionally marvel if the system is resilient.

Secondly, we additionally present fee strategies, each on the retail and wholesale degree. At retail, we challenge money, nevertheless it doesn’t cowl all wants, as a result of it can’t be used digitally. For instance, it can’t be utilized in e-commerce, which now accounts for greater than a 3rd of day by day transactions by way of worth.

P. However, this isn’t one thing new.

R. Yes, though ten years in the past this was not as problematic as it’s now. Cash was king. With it nearly all wants may very well be lined. The urgency of offering further technique of fee was not so nice. But with technological growth, customs have modified. The risk of paying with central financial institution cash on the retail degree, i.e. with money, is lowering very quickly: in 2024 money was utilized in 24% of day by day transactions in worth phrases, in comparison with 40% in 2019.

P. But the “defensive” aspect he speaks of, the geostrategic one, exists.

R. Obviously, potential geopolitical tensions and the militarization of any instrument you may consider improve the extent of danger, reinforcing the message that we’d like a European fee system that addresses all our fee wants and relies on European expertise and infrastructure. That is, a system that’s completely beneath our management.

That is what we’re doing with the digital euro. Afterwards, will probably be as much as folks to determine in the event that they use it or in the event that they complement it with personal fee strategies. We do not go into that. But now we have to supply a method of fee that meets the wants of Europeans and avoids extreme dependencies.

P. In quick, it’s a option to defend cash as a public good.

R. Of course, it’s public cash in digital format.

P. There are voices within the European Parliament and within the personal sector that advocate growing the fee system, however ready for banks to develop their various.

R. That is the proposal of the rapporteur in Parliament. We have been calling on the personal sector to offer a pan-European answer for a few years now. We’re glad they’re making an attempt to attach in a roundabout way; We imagine that it might reinforce the resilience of the system that I talked about earlier than. We additionally suppose that the digital euro will improve the chance that the personal sector can develop a pan-European system.

P. Because?

R. The digital euro might be authorized tender. All retailers who settle for digital funds right now should settle for the digital euro. But it’ll additionally indicate a single public normal accepted by all European retailers. That is, when a fee service supplier (banks and fintech corporations) supplies service to a service provider, the service provider has to implement their requirements. Therefore, the extra requirements there are, the extra fragmented they are going to be. With the digital euro, there might be a single, open normal, which will even be obtainable to the personal sector.

P. What do you consider the proposal that the digital euro can solely be used within the modality offline (with out the necessity for an web connection, bringing gadgets collectively)?

R. One of the issues we try to resolve with the digital euro is the shortage of a viable European fee technique for e-commerce. How are you able to pay with the answer offline within the discipline of digital commerce? Don’t know.

P. Federal Reserve Chairman Jerome Powell has seen his independence threatened. President Lagarde and different governors have come out to defend him. Do you suppose these uncommon assaults can impression financial insurance policies?

R. We are the central financial institution of the euro zone, not the US. We analyze the scenario of the euro zone economic system and set our rates of interest to make sure value stability, that’s, an inflation of two% within the medium time period. What occurs in different components of the world is related so long as it’s related for inflation within the euro space.

P. At the tip of 2025, President Lagarde stated we’re in “a good position.” What can threaten that place?

R. The GDP has been resilient and we count on figures that may very well be even higher than anticipated. Inflation has fluctuated round our goal in current months. The excellent news, from my viewpoint, is that the final revision was primarily resulting from funding. This just isn’t solely a requirement part, but additionally a supply-side part: it means funding in larger capability [productiva]which ought to be mirrored in quicker development with out endangering value stability.

P. But uncertainty has been growing in current weeks.

R. Yes, uncertainty could improve and this may increasingly impression the power of the restoration as it might jeopardize funding. Therefore, the constructive facet that I discussed earlier than could be hindered. Yes, this might have an effect, particularly on development, and clearly it might affect inflation. If this uncertainty continues, it’ll have an effect on the true economic system.