European Central Bank President Christine Lagarde confirmed that the institution is actively developing a digital euro. This initiative aims to provide a digital alternative to physical cash for everyday retail transactions. According to Lagarde, the project is designed to foster innovation and competition within the retail payments sector while supporting Europe's strategic autonomy.
The ECB also recently introduced the Pontes system, which allows financial institutions to settle wholesale transactions using tokenized assets in central bank money. This platform serves as an alternative to private settlement assets like stablecoins. The system is currently offering a core set of services, with full implementation of the project scheduled for 2028.
Regarding the broader economic outlook, Lagarde noted that the euro area's inflation rate reached 3.8% in September, primarily driven by elevated energy costs. The ECB anticipates these pressures will subside in the coming year. However, inflation is expected to remain above the bank's target through the first half of 2027, necessitating a measured policy approach.
