Safeguarding Trust and Monetary Sovereignty in a Digital Payments era

Good morning,

It is a great pleasure to be with you today at the Hong Kong Fintech Week.

This event provides a timely opportunity to reflect on the profound changes we observe today: the digitalization of payments and more broadly the tokenisation of finance and its associated distributed infrastructures. While they can unlock new opportunities for consumers, businesses and financial institutions, these innovations also bring new risks for the efficiency and safety of payments and supporting infrastructures, notably in challenging principles governing the monetary order that have long underpinned their functioning. An important determinant in my view of their actual impact will depend on the evolution of central banks’ policies and services, which may vary from one jurisdiction to another depending on locaI circumstances and policy priorities.

Against this background I would like to focus my remarks on the structural changes affecting the euro area landscape, the challenges they raise from the perspective of a central bank member of the Eurosystem and how we are adapting our policies and services to address them.

1. Let me start with the changes in the euro payments and market infrastructure landscape and their associated challenges. They cover both the retail and wholesale space.

The retail transactions space is undergoing profound transformations driven by the increasing digitalisation of payments. This trend is reflected in the gradual decline of cash use for everyday transactions and the growing adoption of innovative payment solutions, including contactless and mobile payments. 

At the same time, domestic payment schemes are facing a gradual erosion of their market share. This situation has allowed non-European providers to gain a leading role across Europe, for card payments which have become the dominant non-cash payment instrument in the euro area. It has also allowed non euro denominated settlement assets to emerge in the form of USD-denominated stablecoins. 

This raises important issues for the efficiency, the safety and the strategic autonomy of payment services in the euro area.

A different, yet equally transformative, trend is reshaping the wholesale transactions space: I am referring here to tokenisation, namely the representation of financial assets as tokens recorded and transferred with the distributed ledger technology (DLT). Tokenisation has the potential to reshape wholesale markets by transforming how financial assets are issued, traded, held and settled, while redefining the type and role of market infrastructures and intermediaries. It promises significant efficiency gains, faster execution and settlement, lower operational costs, and programmability through the automation of financial processes.

However, tokenisation also raises important challenges. As tokenised finance develops in the euro area, interoperability, liquidity and strategic autonomy considerations may also become a concern.

2. To help address those challenges, an important tool used by the central banks of the Eurosystem has been to adapt their central bank money and the associated services to the digitalisation of payments and the tokenisation of finance

This adaptation is driven by the conviction that we need to extend to the digital and tokenised space of payments and financial markets the two-tier structure of our current monetary system. By doing so, we will preserve stability, trust in and the singleness of our currency, the euro, as well as our strategic autonomy. Let us recall that in this two-tier structure, central bank money and commercial bank money perform distinct yet complementary functions.

As a result, a number of important projects are underway, and some have already reached the operational phase.

Let me mention the following:  

• Digital euro (D€) for retail payments: The D€ is intended to serve as the digital equivalent of banknotes, ensuring access to a digital form of central bank money and extending the features of cash into the digital environment. The D€ will provide a public, sovereign, and pan-European means of payment, based on an infrastructure developed by European public and private providers. As the legislative process for the D€ regulation is making strides, the ECB could officially commit to issuing a D€ in 2027, paving the way for a potential issuance in 2029.
   
• Wholesale CBDC: With the recent launch of the Pontes service in September 2026, wholesale CBDC, which is the tokenised version of central bank money for wholesale payments, is now available, and the offering will be further enhanced by mid-2027 and completed by the end of 2028. To support this transformation, the Banque de France has launched, with Euroclear, the Pythagore project to modernise and tokenise the NEU CP market which is the deepest short-term funding market in continental Europe, using wCBDC through Pontes for the cash leg.
   
• With a longer-term perspective The Eurosystem has also launched the Appia project, to prepare the evolution of Europe’s financial infrastructures, with the objective of supporting the integration of European financial markets, leveraging tokenisation and DLTs, and safeguarding Europe’s strategic autonomy. To that end, the Eurosystem is currently exploring with market participants several architectural options, including interoperability arrangements, infrastructure models and mechanisms to ensure efficient liquidity management. The findings will feed into an Appia Blueprint expected in 2028.

Let me recap by stressing two points:

- first, the adaptation of their central bank money services and their associated infrastructures is an important contribution that the central banks of the Eurosystem are making to ensure the extension of our two-tier monetary system to the digital and tokenised space of payments and financial markets. This is crucial in my view to addressing the challenges brought by those innovations.

- second, through their catalyst role, the central banks of the Eurosystem are also contributing to scaling up those innovations. In the field of digital retail payments, the support to the development of private and euro area-wide payment services like Wero, and the work on synergies and complementarities with the digital euro, should contribute to this scaling up. It is also taking place in the field of wholesale payments and tokenisation.  In France, we are specifically contributing to this objective through initiatives like the Pythagore project I mentioned earlier and also the work done by the Strategic Group on innovation and Tokenisation of the French market place. The latter’s objective is to strengthen market coordination and accelerate the development of concrete tokenisation projects. For example, this could involve encouraging the private sector to develop a clearing mechanism for tokenised bank deposits, relying on Pontes for settlement in tokenised central bank money.

Thank you for your attention.