Honourable Governor. Excellencies. Ladies and gentlemen.
Good morning everyone. Tere hommikust.
It is always a pleasure to return to beautiful Tallinn on the shores of the Baltic Sea, which has in recent years become somewhat of a NATO lake!
I am very pleased to participate in this forum which gathers the views and insights of such distinguished speakers on such an important priority.
Each of the Baltic States has undergone a dramatic economic transformation over the course of the last two decades.
Membership in the EU and NATO, along with joining the euro area, has clearly provided the stability, security and opportunities needed for our economies to finally realise their full potential.
This strong performance also endorses the Baltic States embrace of innovative technologies.
Nowhere is this commitment more evident than in Estonia, which has earned a reputation as the worlds most advanced digital society.
So, it is particularly appropriate that we meet in Tallinn to discuss the opportunities that the digital euro presents.
Today, I would like to focus my remarks on how the digital euro can improve Europes strategic autonomy and enhance our preparedness to respond to emerging threats.
But first, allow me to begin by providing a broader context for the need to introduce the digital euro.
Technology continues to evolve at a breathtaking rate, transforming the way we live, work, and interact with each other.
And we must continiously adapt to keep up.
This also includes how we use our currency.
Today, more and more Europeans are choosing to pay digitally.
The share of cash payments in the euro area between 2019 and 2024 has dropped from 72% to 52% at the point of sale.
In fact, Estonia ranks among the euro area countries with the lowest share of cash payments at the point of sale, and the highest number of card payments per capita.
The digital euro is designed to respond to the challenges and opportunities presented by this transition.
Actually, Europe did not reap the full benefits of the digital revolution brought about by the internet.
We are still paying the price for this, with the productivity gap between the EU and the US today being largely explained by the tech sector.
The digital euro presents another important opportunity to embrace technology that will protect, facilitate and drive future economic growth.
Turning now to the digital euros role in improving Europes strategic autonomy.
In a more fragmented world, where transactional diplomacy is increasingly replacing multilateralism, the EU must become a stronger global actor.
This means reducing the dependencies that might impede us from pursuing strategic policies in line with our own values and interests.
Today, the space left behind by declining cash use is being largely covered by non-EU payment solutions.
In fact, international card schemes are still dominating the European retail payments landscape, with 13 euro area countries relying entirely on international card schemes for card transactions.
Estonia is one of those countries where international schemes fully dominate the payment card market.
This strong dependence of the European retail payments landscape on foreign players represents a weakness in terms of our strategic autonomy.
Ceding technological control over the EUs economy entirely to others deeply impedes Europes ability to act autonomously on the world stage.
It leaves European payments systems vulnerable to threats to withdraw or changes to the services provided by these international providers.
It risks relegating Europe to the position of policy-taker, instead of policymaker.
The digital euro can help to counter these risks by ensuring that the euro area retains control over its financial and payments infrastructure.
It can instantly provide a pan-euro area means of payment and also support European private initiatives scaling-up across the euro area.
The digital euro would also benefit merchants, who would pay transparent, lower fees for accepting digital payments.
It can be an important pillar of strengthening the EUs strategic autonomy by increasing the euros resilience vis-à-vis other currencies, payment systems, and “stablecoins” not denominated in euro.
So, there is a great and growing strategic importance to the digital euro project in view of the quickly changing and challenging geopolitical landscape in which Europe finds itself.
Introducing the digital euro is a statement of our determination to ensure that Europe will still decide its own destiny in this increasingly fragmented world.
Secondly, with regard to preparedness.
Here, from the Baltic States, we can see very clearly that Europe faces a new reality marked by growing threats and deep uncertainty.
Since Russia began its full-scale invasion of Ukraine, we have seen a fresh wave of sabotage, foreign information manipulation and interference, electronic warfare and hybrid and cyberattacks.
Almost every day now, we see efforts to test, probe and provoke by violating the Unions airspace, including here in Estonia.
The Baltics States have been consistent in warning their partners against the risks posed by Russia and the Kremlin regime.
But not everyone sees the danger.
In this context, policymakers at every level have a responsibility to take all possible steps to reduce our vulnerability to disruptions and attacks.
That is why, earlier this year, the European Commission came forward with a preparedness strategy - our action plan to effectively respond to emerging threats.
The rapid digitalisation of our societies also comes with an increased exposure to cyber risks.
European payments systems are not immune to these threats.
By providing a digital means of payment built on European infrastructure and standards, the digital euro reduces the dependence of our payments landscape to third country providers.
The Commissions proposal also contributes to preparedness by ensuring the digital euros offline functionality, enabling payments to take place even amidst connectivity outage situations.
Digital euro transactions will also be protected by the Digital Operational Resilience Act, which ensures that financial institutions operating in Europe can withstand, respond to, and recover from ICT disruptions, such as cyberattacks or system failures.
The digital euro can, therefore, play an important role in reducing vulnerabilities and enhancing our preparedness by improving the resilience of our payments systems.
It is important to note here that the digital euro will complement and not replace cash.
As a sign of the Commissions determination to safeguard the right to pay in euro cash and have easy access to cash, the Commission proposed a regulation on the legal tender of euro cash alongside the digital euro proposal.
Allow me now to provide a brief update on where are we in the legislative process to make the digital euro a reality.
The European Commission tabled its legislative proposal for a digital euro already two years ago.
Since then, we have seen slow but steady progress.
Today, discussions remain ongoing in the Council and the European Parliament.
It is normal for negotiations on such a complex and consequential proposal to take time.
However, given the challenges I have already mentioned, there is now a growing urgency to reach political agreement and address the remaining open issues.
Thats why I welcome the Danish Presidencys ambition to reach a common approach in the Council by the end of the year.
The time to act is now, to give both the ECB and the private sector the legal certainty needed to start preparing for the digital euro.
This legal certainty can only be achieved by the adoption of the Regulation.
To conclude, ladies and gentlemen, our currency must continue to evolve alongside the geopolitical and technological shifts reshaping our world.
The euro has become a mark of Europes economic strength and a symbol of Europe in the world.
In 2026, the euro area will welcome its 21st member, Bulgaria.
The currency that will power the prosperity of 21 euro area countries must now fully embrace the technologies of the 21st century.
The digital euro is not just an innovation, it is imperative to promote our strategic autonomy, improve the resilience of Europes retail payments, and harness the opportunities of the digital age.
Thank you once again for this invitation to speak here Tallinn.
Estonias drive in digital policies will be instrumental in progressing this file towards a successful outcome.
Thank you very much. I look forward to todays discussions.
