MONEY IN TRANSITION
Opening Speech by Christine Lagarde, President of the European Central Bank, at the ECB Conference on “Money in Transition: Digitalisation and Innovation in Payments” Frankfurt am Main, 15 June 2026.
Eight centuries ago, the fairs of Champagne marked a pivotal moment for Europe, facilitating trade and settlement among merchants across the continent. Initially, these gatherings allowed merchants from regions like Flanders and Italy to conduct transactions smoothly, with debts settled on paper, eliminating the cumbersome transport of silver. These fairs enabled significant sums to change hands with minimal physical currency involved, creating a unique era where a fragmented Europe operated as a unified market.
As time has progressed, Europe has made remarkable strides toward integrated financial systems, particularly with the advent of the euro and its supporting frameworks. Yet, challenges persist. The example of Champagne illustrates what is at stake if these challenges remain unaddressed. As new economic channels opened and tolls increased, merchants began to abandon these fairs, leading to the decline of Europe’s first unified market.
Today, we confront two primary challenges – the transformative impact of technology on financial exchanges and the geopolitical implications that have made financial infrastructure a tool of power, emphasizing the renewed importance of sovereignty. These challenges, while significant, present an invaluable opportunity for Europe. In our capital markets, they can aid in dismantling the fragmentation that has hindered progress for decades, while in retail payments, we have the potential to enhance competition by fostering a more inclusive market across Europe.
To seize this opportunity, the Eurosystem is undertaking a comprehensive strategy, beginning with wholesale markets. The current state of cross-border transactions involves multiple distinct record-keepers, each managing their own ledgers, leading to excessively high transaction costs and a persistent home bias. In stark contrast, the United States operates with only two central securities depositories, highlighting the inefficiencies present within the European framework. Tokenisation emerges as a viable solution, allowing ownership to be recorded on a shared ledger, enabling simultaneous transfers of ownership and payment underwritten by the instruments themselves. This transition has the potential to unify national systems into a cohesive entity from its inception.
However, technology alone will not resolve these issues. The existence of a credible, risk-free asset is imperative for the success of tokenised finance. Without such backing, tokenised finance is at risk of becoming isolated within private ecosystems, stalling its potential for broader application. Insights from the market reveal a clear consensus: stakeholders hesitated to commit to issuing digital assets at scale without assurances of settlement in central bank money, a widely trusted and accepted form that adjusts fluidly to market demands, ensuring liquidity exactly when needed.
In response to this demand, we are actively progressing. This year, our Pontes project will provide the infrastructure to settle tokenised transactions using central bank money. Meanwhile, our Appia initiative is ambitiously outlining a blueprint for a unified European market in tokenised finance, positioning Europe at the forefront of this transformative technology.
Moving to the realm of retail payments, we recognize the crucial role of central bank money. Currently, the only public monetary instrument we can access is cash, which serves as a tangible link to the central bank. The Eurosystem is steadfast in its commitment to preserving cash, with a new series of euro banknotes poised for release. Nonetheless, as society shifts increasingly towards online transactions, the risk of severing this essential connection looms large. The introduction of the digital euro aims to bridge this gap, representing a euro issued by the European Central Bank, accessible to all citizens.
The digital euro not only aims to safeguard our existing financial link but also presents an opportunity to alleviate our long-standing dependencies. Europe has notably lacked its own pan-European card scheme, with most transactions facilitated through foreign-owned networks. In fact, international schemes currently account for over 60% of card payments within the eurozone, and alarmingly, 13 of the 21 euro area nations lack a national card scheme. This lack of a cohesive framework has prevented European schemes from achieving the necessary scale, perpetuating a cycle of limited adoption among merchants and consumers alike.
The implementation of the digital euro disrupts this cycle. Its status as legal tender mandates acceptance across all platforms, potentially providing Europe with a universally applicable payment tool. Moreover, the open technical standards of the digital euro afford any provider the opportunity to leverage its framework, allowing them to establish a presence across Europe from the outset. This development could facilitate genuine competition among European players for the first time.
Lastly, we must address the landscape of cross-border payments, which currently face significant hurdles. The processes involved in sending money abroad remain sluggish and costly, often reliant on intricate chains of correspondent banks. Promisingly, US dollar-denominated stablecoins are emerging as contenders to fill this gap, often proposing faster and more economical solutions compared to the traditional systems.
While the potential advantages are noteworthy, it remains to be seen whether these propositions will hold true once comprehensive costs and compliance standards are integrated. Nevertheless, there is an undeniable need for reform, a sentiment echoed by the G20, which has prioritized cross-border payments within its reform agenda.
The Eurosystem is active in this realm as well. By interconnecting our instant payment system, TIPS, with others globally, we empower European payments to extend their reach internationally. A link to India’s UPI—the largest instant payment system worldwide—is in development, with additional connections to Southeast Asia’s Nexus Global Payments network and Switzerland’s SIC IP system progressing through analytical stages. The objective is simple: to enable European citizens to transfer funds swiftly to an expanding array of countries worldwide through systems they can call their own.
Ultimately, the largest opportunity lies in the international role of the euro, which has historically been constrained by the same fragmentation we experience domestically: shallow markets and divided infrastructure. By promoting internal coherence, we can set in motion a gradual transformation. An integrated market, firmly anchored by reliable public currency, is essential to enhancing the euro’s attractiveness on the global stage.
The Eurosystem is committed to playing its role in this progress. However, realizing this vision for Europe requires collaboration. It necessitates the market’s investment in technology and agreement on shared standards. Through Appia, we are collectively establishing these standards to ensure seamless connectivity among tokenised networks, preventing the emergence of isolated silos.
Additionally, governmental support is vital in providing legal clarity through a cohesive framework for digital assets. As disparate national systems proliferate, we must establish a comprehensive framework first; otherwise, we risk replicating the fragmentation that current advancements are poised to dissolve.
Historically, a divided Europe found unity in settling accounts. Nevertheless, this unity proved unsustainable. What we have achieved—an integrated currency operating on common standards—is genuinely remarkable. The challenge now is to navigate this currency into the tokenised era, ensuring that new technologies bolster our shared financial framework, rather than splintering it. If we execute our strategies effectively, this time, we will succeed.
