The European Central Bank (ECB) has completed the two-year preparation phase of its digital euro initiative and is now entering the next stage of development. Between November 2023 and October 2025, the ECB drafted a rulebook, selected private-sector providers to build the technical platform, and tested prototypes with more than 70 banks, universities and fintech firms. The Governing Council plans to continue technical work and legislative coordination, with pilot testing expected to begin after EU lawmakers adopt the necessary framework. The European Commission aims to deliver the legislation in 2026, while the first issuance could occur around 2029.
The digital euro would serve as a central-bank digital currency (CBDC) — an electronic form of cash issued by the Eurosystem. It is intended to coexist with physical money and be available to everyone across the euro area. According to the ECB, the digital euro will be free to use, highly secure and designed to meet strict privacy standards. The platform will enable both online and offline payments, with offline transactions using cryptographically protected tokens stored on secure elements in phones or cards.
One of the ECB’s main objectives is to strengthen Europe’s monetary sovereignty. Around two-thirds of euro-area card payments are processed by non-European companies, and many countries rely entirely on international card networks. A digital euro would give Europeans an official, pan-European electronic payment option, reducing dependence on foreign card schemes and dollar-denominated stablecoins.
The project also responds to the growing popularity of cryptocurrencies and stablecoins such as Tether (USDT) and USD Coin (USDC). The ECB warns that widespread use of U.S. dollar stablecoins could “dollarise” the eurozone and undermine its monetary autonomy. By contrast, the digital euro would be backed by the central bank, fully redeemable in euros and insulated from private-sector risks.
The ECB stresses that, unlike cryptocurrencies such as Bitcoin, the digital euro would be legal tender — accepted everywhere in the euro area. It would maintain price stability, always worth one euro, and would not rely on energy-intensive technologies. The system will not use mining and is being designed for efficiency and minimal environmental impact.
As the project advances, Europe’s regulatory landscape is also evolving. The Markets in Crypto-Assets (MiCA) regulation, which took effect in late 2024, introduced strict rules for stablecoin issuers to ensure financial stability. Euro-denominated stablecoins currently account for less than €350 million in market value, compared with the dominance of dollar-based tokens.
Banks remain cautious, expressing concern that a digital euro could divert deposits from commercial institutions. The ECB is considering setting holding limits — around €3,000 per user — to prevent large outflows and safeguard financial stability. Policymakers are still debating the final features, with member states divided between a minimalist approach and a more functional, programmable design.
If successfully implemented, the digital euro would mark a major milestone for Europe’s monetary system. It aims to offer citizens a secure, privacy-friendly and state-backed digital payment method, while preserving monetary control and reducing reliance on foreign digital currencies. The final outcome will depend on how lawmakers, banks and the public respond as the project moves closer to reality.