Adress by the Central Bank Executive Board Member Mr. George Karatzias on behalf of the Governor of the Central Bank of Cyprus
Distinguished speakers from the Eurosystem, esteemed colleagues and representatives of the local payment services market.
Goodmorning. Kalimera.
It is my pleasure to welcome you to this important gathering here in Cyprus—a country that holds a strategic place in Europe’s financial and geopolitical landscape. We gather at a momentous juncture, heralded on one hand by the preparations for the digital euro only five days before we, at the Governing Council of the ECB, decide on the project’s next steps, and on the other hand amidst intense legislative negotiations in Brussels for the Single Currency Package.
I shall not detract from the valuable contributions of our distinguished guests, whose insights will be explored in detail for matters of direct relevance to you, the future distributors and acquirers of the digital euro. However, picking from those themes, I intend to highlight how the digital euro can contribute to a) improving our resilience against evolving risks, and b) to strengthening Europe’s strategic sovereignty: two closely related and mutually reinforcing concepts. On a different note, I will emphasise why mastering the Digital Euro Scheme Rulebook positions you for a smooth journey ahead. Last but not least, I intend to prompt you to unlock the insights through innovation partnerships, an ongoing Odyssey with a promising second round on the horizon.
The digital euro represents a tectonic shift since paper money was invented. It is designed to guarantee free access to safe central-bank-issued digital money with legal tender status. Its establishment and regulation will be enshrined in Union law, while the infrastructure will be owned by the Eurosystem and entrusted solely to European public and private service providers. In effect, the digital euro project signifies the attenuation of our dependence non-European payment schemes, fortifying the autonomy of our monetary system and enhancing the resilience of our payments ecosystem against external shocks, geopolitical frictions and systemic disruptions. We, at the Eurosystem, are determined to uphold that citizens and businesses retain access to a public means of payment under any conditions, whether online or offline, in times of normalcy or in times of crisis. And you, the future distributors and acquirers of the digital euro, will be an indispensable part of it.
Allow me to first elaborate on the paradoxes we are currently witnessing. While technological innovation propels us forward with instantaneous and seamless transactions, these very advancements expose us to various vulnerabilities stemming from diverse root causes, such as cyber-attacks, power outages, and tense geopolitical developments that could compromise, among others, critical infrastructure.
The current spate of airspace violation and provocation, and the disruptions at major European airports are a case in point. It is against this backdrop that countries in the Baltic and Scandinavia have been demonstrating a heightened focus on enhancing the resilience of payments. Without a doubt, this is a matter of strategic preparedness and national security. Ensuring the physical availability of cash and the robustness of financial market infrastructures is viewed as essential to economic activity and societal stability under stress.
In a similar vein but under a different scenario, Portugal and Spain experienced significant disruptions in their payment infrastructures earlier this year, which reverberated through their economies, impacting businesses and consumers alike. The operation of point-of-sale terminals and ATMs was disrupted for hours, highlighting another structural vulnerability: while cash remains our sole fallback in times of systemic disruption, its utility is inherently constrained by the prerequisite of prior physical access—an access that is itself contingent upon the operability of providers of essential services, such as electricity and telecommunications. In contrast, the offline functionality of the digital euro would have offered a resilient, technology-enabled complement to the immediacy and finality of cash transactions.
Ladies and gentlemen, in our country cash usage receded remarkably by 11 percentage points between 2022 and 2024, while digital payments have gained significant traction since 2019, reflecting a broader transformation in consumer behaviour and payment preferences. In 2024, cards were used in 42% of transactions in physical stores and in 61% of transactions online. Nevertheless, Cyprus together with 12 other euroarea countries remains entirely reliant on the duopoly of Visa and Mastercard, exposing the entire ecosystem to vulnerabilities beyond our control: be it in terms of operational resilience, the discretionary space for regulatory intervention, or even in terms of merchants’ weak negotiating leverage to reduce charges. Our painful past has taught us the severe repercussions of dependence on external powers that curbs our sovereignty. It is our solemn duty to safeguard our sovereign money in the digital era, as well as our competencies for taking measures when deemed necessary.
The urgency of advancing the introduction of the digital euro is substantiated, albeit not solely, by European policymakers and political leaders. Commissioner Valdis Dombrovskis has expressed the view that ‘the digital euro is […] imperative to promote our strategic autonomy’ , while Eurogroup members collectively displayed last month their determination to advance this important project, because it entails a fundamental building block for a strong and sovereign Europe .
Esteemed colleagues,
I expect that in five days we will have the green light to move to the second part of the preparation phase. Your role is not secondary, it is of primary importance. You are not bystanders in this transformation, you are partners.
In 2026, legislation is expected. By 2029, the digital euro could be a reality. This is not a wait-and-see moment. Between now and then, I call on you to act on three critical fronts:
1. ‘Master the Rulebook. Integrate, Don’t Duplicate’
Invest the time to develop a clear and comprehensive understanding of the functional and technical requirements set out in the Digital Euro Scheme Rulebook. As trusted intermediaries of the digital euro, you will need to consider its impact within the broader context of your digitalisation, innovation, business model and capability strategies. By the time the democratic negotiations in Brussels are concluded, the rulebook will continue to be an evolving document. Treat it as an ‘assistance guide’ in the course of your preparations to adopt, operate and innovate with the digital euro, while ensuring compliance with regulatory provisions.
We acknowledge your recent investments for SEPA Instant, TIPS, and other infrastructures. These investments remain vital, but they can and should be leveraged; not replaced. Now is the time to start considering how to evolve these; and the rulebook is your starting point for integrating the digital euro smoothly with existing systems and infrastructures, enabling seamless transactions across platforms.
Using the digital euro infrastructure that will offer pan-European reach, as well as the rulebook’s homogeneous standards on the front-end, the digital euro will boost instant payment solutions already implemented or envisaged to be further developed.
2. ‘Unlock Insights Through Innovation Partnerships’
The digital euro will only succeed if it works for everyone — from the digitally excluded to the digitally native. We proudly acknowledge the participation of Bank of Cyprus as a pioneer in the experimentation activities in the digital euro innovation platform, the findings of which confirm the diverse ways in which the digital euro will make citizens’ lives easier.
Let me concentrate on three use-cases for your consideration:
3. ‘Extend access to the last mile’
The digital euro will only succeed if it reaches everybody — from the busiest city centres to the most remote villages. We recognise the challenges citizens in rural areas face in accessing physical banking branches or infrastructure, such as ATMs. The digital euro can provide a secure, accessible and convenient alternative. ‘Digital, yes — but truly democratic.’ Let this principle serve as your compass in championing its adoption by your clients.
As I draw my remarks to a close, I would like to acknowledge the work of the digital euro team here in Cyprus: Stelios Georgakis, Stella Ioannidou, Xenios Hadjimichael and Andreas Antoniou, whose collective contribution has been instrumental in advancing the initiative locally. This is the very same team that will undertake the Single Currency Package during the Cypriot Presidency of the Council of the EU and pave the way towards the end of the legislative process. Only after that will we be in a position to inform the public about when we can expect to welcome the digital euro in our daily lives.
Inspired by qualities deeply rooted in the Greek intellectual tradition, allow me to conclude that the digital euro represents a historic convergence of Europe’s numismatic heritage with the exigencies of modern digital finance. It is an embodiment of sovereignty and autonomy synthesising resilience, while inclusion and maintenance of citizens’ freedom to choose how to pay define the democratic paradigm it serves to uphold. Like the ‘hetairoi’ (εταίροι) from our ancestral tradition—you will be our trusted companions in bringing the digital euro to life. Let’s bring together this transformative vision to every citizen in Cyprus and beyond.
Thank you for your attention.