ECB President Lagarde Says Bank Is Preparing Retail Digital Euro as Inflation Hits 3.8%

European Central Bank President Christine Lagarde stated at the IMF Annual Meetings on Saturday that the ECB is devising a retail digital euro to complement physical cash for day-to-day payments, alongside efforts as a 37-bank consortium prepares a euro stablecoin. Lagarde reported that the euro area's 3.8% inflation rate in September largely reflected high energy costs, which the central bank expects to ease next year. While the energy shock is expected to keep euro-area inflation above the ECB's target through the first half of 2027, Lagarde maintained that a measured monetary policy response remains appropriate. The retail digital euro initiative follows the ECB's September 21 launch of Pontes, a wholesale system allowing financial institutions to settle tokenized asset transactions in central bank money as an alternative to private settlement assets like stablecoins, with full implementation expected by 2028. "In the retail space we are preparing to complement cash with its digital equivalent — the digital euro — for day-to-day payments. The digital euro will further stimulate innovation and competition in retail payments, ensuring that the continued co-existence of public and private solutions underpins Europe's strategic autonomy in payments." — Christine Lagarde, European Central Bank President