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

ECB Executive Board member Piero Cipollone outlined plans for a digital euro, wholesale settlement service Pontes and broader tokenised-finance framework Appia, positioning them as infrastructure to support European payments, financial integration and competitiveness. ECB analysis estimates a potential €127 billion deposit inflow by 2034; under a hypothetical €3,000 digital-euro holding limit, the aggregate liquidity coverage ratio would fall from 166% to 163% in the business-as-usual scenario, while the net stable funding ratio would decline from 128% to 127%. Legislation is under trilogue negotiation, a 12-month pilot is planned for the second half of 2027, and the ECB aims to be ready for a potential first issuance in 2029 if legislation is completed by end-2026.

Analysis

The investable signal is a gradual shift in payment economics, not an imminent change in bank funding or card-network earnings. A common public acceptance layer could reduce the value of proprietary European acceptance networks over time, but legal-tender reach does not guarantee consumer use: distribution, merchant integration and the economics of bank-provided services will determine adoption. International card schemes retain advantages in global acceptance and cross-border use; co-badging may preserve their role even as domestic transaction pricing faces pressure. Avoid treating this as an outright threat to Visa or Mastercard without evidence of transaction displacement or fee changes.

Wholesale infrastructure is the more credible medium-term catalyst. If Pontes and Appia make settlement interoperable, the relative winners should be institutions able to provide tokenisation, custody, collateral mobility and connectivity—not simply those issuing tokens. Central-bank settlement could let smaller banks’ tokenised deposits interoperate, limiting the network advantage of the largest banks. But operational integration, legal standards and liquidity management remain execution risks; the announced infrastructure is not yet proof of commercial volumes or cost savings.

Over the next 1–3 months, legislative trilogue details matter more than the ECB’s supportive framing. The 2027 pilot and 2028 wholesale milestones are nearer-term adoption tests; structural effects, if any, are 2029 onward. Aggregate deposit safeguards do not eliminate tail risk: crisis flows could concentrate at weaker institutions even if sector-wide metrics remain sound. The contrarian point is that sovereignty rhetoric may overstate commercial disruption, while investors may underweight the long-run pressure on payment tolls if a public rail gains meaningful usage.

Key Decisions for Investors

• No broad card-network short on this speech alone. Track trilogue outcomes, co-badging rules and any evidence of merchant fee changes or transaction displacement; reconsider only if adoption data show sustained substitution, not merely pilot participation.
• Treat European banks as a selective watchlist rather than a sector-wide long: prioritize those that can monetize payment distribution, custody, tokenised-asset servicing or collateral mobility. Verify named-bank exposure, implementation spending and revenue plans before taking positions.
• Monitor payment processors and merchant acquirers for both sides of the public-rail effect: lower scheme dependence could reduce costs, while common acceptance infrastructure could commoditize routing. Require evidence from pilot merchant integration and pricing before expressing a relative-value trade.
• For bank liquidity, watch deposit betas, retail sight-deposit trends and institution-level liquidity buffers as legislation advances. A material holding-limit change, crisis-related deposit shifts, or evidence of concentrated outflows would falsify the benign aggregate-funding interpretation.