European Central Bank to Challenge U.S. and Chinese Dominance in Payments with Digital Euro

The European Central Bank is gearing up to take on the dominant American and Chinese payment systems with the launch of a digital euro, according to Piero Cipollone, a member of the ECB’s executive board.

In an interview with Le Monde, Cipollone emphasised the urgency for Europe to catch up with the United States, especially in areas of technology and productivity.

Cipollone noted that although employment in Europe has seen significant improvement, the growth in productivity remains a serious issue. He stressed that European companies, which are typically smaller than their American counterparts, fall short in investing in new technologies, thereby hindering their competitiveness on the global stage.

He further explained that the fragmentation across national borders and the lack of scale have hindered the financing and growth of European firms, limiting their ability to compete globally. Cipollone illustrated this point by referencing the European Football Championship, where ticket purchases depended on American and Chinese payment platforms like Mastercard and Alipay, highlighting Europe’s reliance on foreign financial infrastructures.

In response to this dependency, Cipollone noted that the ECB is advancing plans to introduce a digital euro, designed as an electronic form of cash, to enhance digital payments within Europe. He explained that while a specific launch date has not yet been confirmed, the ECB is currently in a two-year preparation phase to establish the necessary framework and regulations. A final decision on the digital euro is expected by late 2025.

In a related development, Russia’s largest bank, Sberbank, is set to offer the country’s central bank digital currency (CBDC), the digital ruble, to its customers by early 2025. Anatoly Popov, Sberbank’s Deputy Chief Executive, confirmed the bank’s participation, along with around 20 other financial institutions, in the second phase of the Bank of Russia’s CBDC testing program. The Bank of Russia had earlier projected that the digital ruble could be widely available by July 2025.

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