ECB Prepares Digital Euro to Complement Cash, Lagarde Says

European Central Bank President Christine Lagarde stated that the central bank is actively preparing to launch a digital euro to complement physical cash for everyday retail payments, speaking at the IMF Annual Meetings on Saturday.

Digital Euro and Retail Payments

According to Cointelegraph, Lagarde emphasized that the digital euro will foster innovation and competition within the retail payment sector. She noted that the co-existence of public and private payment solutions is designed to underpin Europe’s strategic autonomy in payments.

The central bank's efforts in digital currency extend beyond retail applications. The ECB previously launched Pontes, a system enabling financial institutions to settle wholesale tokenized asset transactions using central bank money, offering an alternative to private settlement assets such as stablecoins. Pontes currently offers a core set of services, with full implementation anticipated by 2028.

Inflation and Policy Outlook

Lagarde also addressed economic conditions in the euro area, attributing September's 3.8% inflation rate primarily to high energy costs. While an energy shock is expected to keep inflation above the ECB's target through the first half of 2027, Lagarde stated that a measured monetary policy response remains appropriate and that energy pressures are expected to ease next year.

Key facts

• European Central Bank is preparing a digital euro to complement cash for daily retail payments.
• ECB President Christine Lagarde said the digital euro will stimulate competition and support Europe's strategic payment autonomy.
• Euro-area inflation reached 3.8% in September, with energy shocks expected to keep inflation above target through H1 2027.
• The ECB's Pontes wholesale tokenized asset settlement system is slated for full implementation by 2028.