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ECB argues digital euro is needed to preserve trust in central bank money

The ECB said central bank money underpins the euro system by enabling other forms of money to be converted at par, and warned that faster smartphone and app payments make a digital form of cash necessary.

Reported · Written up by our desk · Central Banks

In a speech for the ECB, Piero Cipollone framed central bank money as the legal and economic anchor of the monetary system, saying money holds value because people trust it will be accepted and convert it at par into central bank money.

He said this trust is also what sustains banking and commercial lending, since deposits and loans depend on confidence in the institution behind them, adding that European principles aim to ensure public money is not used to impose terms in favor of private parties.

Cipollone connected the ECB’s digital euro push to changing payments habits, noting that the shift toward smartphone, apps, and platforms is accelerating and that central bank money risks being marginalized if it does not keep pace.

He also pointed to the history of Italian cooperative banking as an example of mutual trust, citing the creation of the first cooperative bank in 1883 and the rapid spread of cooperative banks across Italy by the late 1890s.

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