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

Core Viewpoint - The European Central Bank (ECB) emphasizes the urgency of advancing the digital euro project as cash usage declines significantly, with cash accounting for only 24% of daily transactions by value in 2024, down from 40% five years ago [1][3]. Group 1: Digital Euro Necessity - ECB's Piero Cipollone warns that Europe cannot afford to delay the digital euro while waiting for private-sector solutions, highlighting the increasing reliance on non-European providers for digital transactions [2][5]. - E-commerce now represents over one-third of daily transactions by value, yet central bank money is not usable for these purchases, necessitating the digital euro to adapt to changing payment habits [3][4]. Group 2: Technological and Geopolitical Context - The ECB's push for a digital euro is partly driven by geopolitical tensions that expose vulnerabilities in Europe's payment systems, where foreign control can be weaponized [2][3]. - Cipollone acknowledges that the rapid decline in cash usage and the shift towards digital payments represent an accelerating change in consumer behavior, necessitating a fully European-controlled payment system [3][4]. Group 3: Implementation Timeline - Technical preparations for the digital euro are complete, with the ECB having finished a two-year preparation phase in October 2025, and pilot transactions could begin by mid-2027, with the first issuance possible in 2029 if legislation is approved [5][6]. - The ECB has rejected calls from some European Parliament members to wait for the banking sector to develop alternatives, asserting that private sector solutions are insufficient [6].