European Central Bank Pushes Digital Euro to Extend Cash Benefits Into the Digital Age

• The ECB Governing Council has advanced the digital euro project to its next stage, with pilot testing planned for 2027 and issuance by 2029.
• One reason this agenda is being pushed is that other economies, like China, are also developing CBDCs.

---

The European Central Bank (ECB) is leading one of the most ambitious financial innovation projects in Europe’s history, the creation of a digital euro. This new form of money, known as a central bank digital currency (CBDC), is designed to complement physical cash and bring Europe’s payment system fully into the digital age.

The preparation phase, launched in November 2023, is well underway. The ECB’s Governing Council just confirmed its commitment to advancing the project, echoing calls from European leaders at the October 2025 Euro Summit to accelerate progress.

If the European Parliament approves the necessary regulations in 2026, the digital euro could enter a pilot phase in 2027, paving the way for a full, continent-wide rollout as early as 2029.

Christine Lagarde, president of the European Central Bank, announced that:

The ECB’s Next Steps

In a blog post, the European Central Bank outlined its next steps toward realizing the shared vision of a digital euro. The Eurosystem will concentrate on three main workstreams: strengthening technical capabilities, deepening collaboration with the market, and supporting the ongoing legislative process.

This includes building the technical foundations of the digital euro and testing its core functions through pilot projects. The ECB will also work closely with payment service providers, merchants, and consumer groups to test systems and prepare for the currency’s first potential issuance.

The total development cost, covering both internal and external work, is projected to reach about €1.3 billion up to the first issuance. Once operational, the digital euro is expected to incur annual running costs of around €320 million starting in 2029.

One of the key reasons behind the European Central Bank’s drive toward a digital euro is the steady decline in cash usage across Europe. At the same time, the proportion of businesses no longer accepting cash has tripled, rising to 12% over the past three years.

This trend is mirrored by the rapid growth of e-commerce, where the value of goods purchased online has doubled from 18% to 36% between 2019 and 2024. As consumers and merchants increasingly embrace digital payments, much of Europe’s transaction infrastructure now relies on global private payment systems, many of which are non-European, such as Visa, Mastercard, PayPal, and Apple Pay.

Europe is far from alone in exploring central bank digital currencies. China has already made progress with its digital yuan, while Russia and India have launched pilot programs to test their own CBDCs. Nigeria, meanwhile, became one of the first countries to roll out a fully operational CBDC with the launch of the eNaira in 2021.

In contrast, the United States has taken a very different stance. As reported in our last news story, President Trump signed an executive order prohibiting the issuance or use of a central bank digital currency within the country, fulfilling a campaign promise.

The administration argued that CBDCs could threaten financial privacy and compete directly with private stablecoins, which have become popular alternatives in the U.S. digital payments space.

]]>