Digital Euro

Digitalisation has had a significant impact on our lives in recent years, while it has also brought major changes to financial services. Payments are one area that is developing and changing rapidly with the emergence and availability of new technologies. Development and change are also being dictated by the needs and expectations of users, who are gradually replacing cash with digital payment instruments. Eurosystem is actively responding to the advances brought about by digitalisation by developing own systems and solutions, while encouraging the financial sector to develop secure and effective payment solutions. In the digital euro project, we are thus investigating the possibility of issuing a central bank digital currency – the digital euro – which would enable consumers and businesses to make secure, rapid and cost-effective payments fit for the digital era.

Arguments for issuing a digital euro

In addition to supporting digitalisation, there are several arguments in favour of issuing a digital euro. If the use of cash for payments declines significantly, this could mean greater dependence on (private) digital payment solutions. A digital euro would serve as an additional form of payment, offering greater safety since it would be issued by the central bank, whose claims are risk-free. It would not replace cash, but it would be issued as a complement to cash, facilitating its use in the digital world.

A digital euro would also address the growing popularity of cryptoassets, including stablecoins, as well as the rapid development of central bank digital currencies in third countries, which could become alternatives for everyday payments in the euro area. In such circumstances, European central bank digital currency would help preserve European strategic sovereignty and stability also in the digital age.

The possibility of issuing its own central bank digital currency is also important for the Eurosystem in maintaining the international role of the euro, particularly if people outside the euro area were given access to a digital euro.

A digital euro presents a good opportunity to strengthen cooperation between central banks and the private sector while driving the development of payments in general, as its issuance would further encourage innovation in retail payments.

Objectives in connection with the digital euro

Currently, central banks ensure the supply of cash and accept deposits from commercial banks (public or central bank money), while the private sector provides its own payment solutions, i.e. payments between payment accounts, card payments, and more, based on commercial bank money (private money).

With a digital euro, end users (consumers and businesses) would have the possibility of making payments with public money anytime, anywhere in euro area countries, in different situations (payments in shops and online, and directly between users). The possibility of making payments with money issued by a central bank would maintain its role as a so-called monetary anchor. This role maintains users’ confidence in the euro, which is backed by the convertibility of different (private) forms of money into cash or, if issued, a digital euro.

A digital euro would provide end users with an additional, truly European, payment method. This would strengthen Europe’s strategic autonomy, as today’s electronic payments at points of sale are dominated by card payments based on payment schemes owned by non-European firms.

A digital euro, as a common euro area payment instrument, could also improve the efficiency of the entire European payment ecosystem, as the cost of making and receiving payments (on the merchant side) could be reduced. Finally, a digital euro would make European payments more resilient, as it could be used to make payments even without an internet connection.

Progress of the project

The Eurosystem began analysis of central bank digital currencies in 2017, and activities in this area have since intensified. Following the publication of the Report on a digital euro in 2020, the Eurosystem organized public consultation with the professional and the general public regarding the expected characteristics and functionalities of a digital euro. In July 2021, the Governing Council of the ECB approved the start of the two-year investigation phase of the digital euro project, which began in October 2021 with the aim of analysing the potential design of a digital euro. Based on the conclusions of the investigation phase, a decision was made in the autumn of 2023 to proceed to the preparation phase of the project, which concluded in October 2025. During the preparation phase the Eurosystem moved from theoretical to practical aspects of the digital euro, including the development of the scheme rulebook, the selection of providers for digital euro components, and the experimentation with market stakeholders, supporting the co-legislators with the legislative process and analyzing the potential fit of a digital euro in the European payment ecosystem. With the end of the preparation phase, the digital euro project entered next phase, the objective of which is that the Eurosystem is ready to issue a digital euro in 2029, if the legislative process concludes in 2026. Nevertheless, the decision to issue a digital euro has not yet been made.

The next phase of digital euro project will focus on technical readiness to develop a digital euro, interactions with market stakeholders and supporting the legislative process. Additionally, digital euro pilot exercise and its initial transactions could take place in 2027.

Pilot Project for the Digital Euro

The pilot project will begin in the second half of 2027 and will last for 12 months. Within the pilot, the planned functionalities of the digital euro will be tested in a controlled environment, allowing for the verification of technical capabilities, operational procedures, and the overall user experience. The test version of the digital euro will be used exclusively for testing purposes and will not have the status of legal tender.

Employees from Eurosystem central banks and selected merchants providing services at locations and in the e-shops of national central banks and the ECB within the euro area (e.g., cafés and restaurants) will participate in the pilot project. Employees of participating central banks will be able to use the test version of the digital euro to make payments to each other (both online and offline), as well as to pay at physical points of sale and in e-shops, including mobile transactions, at the locations of national central banks and the ECB in the euro area. Selected payment service providers will be responsible for onboarding participating users in the pilot and for verifying the basic functionalities of the digital euro.

The pilot project enables payment service providers to actively participate in shaping the future of payments in Europe and to work directly with the Eurosystem, with no financial compensation for their participation. Accordingly, the European Central Bank, within the Eurosystem, has published a call for applications inviting licensed payment service providers to participate in the digital euro pilot project. More information about the call is available on the ECB’s website. Answers to frequently asked questions are also available.