The European Central Bank has set out its clearest timetable yet for the potential launch of a digital euro, signalling readiness for first issuance in 2029 if EU lawmakers adopt the necessary legislation next year. Speaking on 18 February 2026, Executive Board member Piero Cipollone detailed how the project has moved into an advanced preparation phase, with a pilot involving real transactions planned for mid-2027.
The message was twofold: the digital euro is technically progressing, but its launch remains contingent on political agreement. The ECB’s working assumption is that the Regulation establishing the digital euro will be adopted in 2026, unlocking the path towards a formal issuance decision.
From Design to Pilot Phase
According to the presentation, the project entered its current phase in November 2025, following earlier investigation and experimentation stages. The focus now is on three pillars: advancing technical readiness, deepening market engagement and supporting the legislative process.
A 12-month pilot is scheduled to begin in the second half of 2027. It will be conducted in a controlled Eurosystem environment and involve a limited number of payment service providers, merchants and Eurosystem staff. PSP selection is due to start in the first quarter of 2026.
The aim of the pilot is not merely technical testing. It is designed to refine the value proposition, improve the go-to-market strategy and prepare for a broader roll-out. In effect, it will determine how the digital euro functions in practice before any political decision to issue.
Banks at the Centre, Not the Sidelines
A central theme of Cipollone’s remarks was reassurance to the banking sector. The ECB reiterated that EU-licensed banks and PSPs will be at the core of distribution. Customers would access the digital euro through their existing banking relationships, preserving the current intermediation model.
Safeguards include holding limits, no remuneration, reverse waterfall functionality and no business holdings. These measures are intended to prevent large-scale shifts of deposits away from commercial banks.
Crucially, the ECB outlined a compensation framework designed to address industry concerns. Under the proposed model, issuing and acquiring banks would not pay scheme and processing fees, merchant service charges would be capped and inter-PSP fees would also be capped.
The presentation argues this structure could generate cost savings for PSPs, particularly given the growing market share and margins of international card schemes and the expansion of digital wallets.
A Sovereignty Play in Payments
Beyond domestic distribution, the ECB framed the digital euro as infrastructure.
The slides highlight co-badging arrangements and a standardised euro area acceptance network that private schemes could leverage. The stated objective is to eliminate the need to pay international card scheme fees for euro area cross-border transactions.
In practice, this positions the digital euro as a strategic tool for strengthening European payments sovereignty. Rather than replacing private solutions, the ECB argues it would coexist with them and act as a fallback where private schemes are not yet accepted.
Legislative Milestones Ahead
On the political front, the Council of the European Union adopted its position on the digital euro Regulation on 19 December 2025. A European Parliament position is targeted for May 2026, with adoption of the Regulation envisaged later in the year.
Only after adoption could the ECB take a formal decision to issue. The timeline presented indicates a minimum two-year period between that decision and actual issuance.
The Council introduced several changes reflecting banking sector demands, including transitional fee caps comparable to debit card averages, voluntary provision of multiple accounts, and stronger rules to ensure PSP access to mobile device hardware and software for offline functionality.
What Happens Next
The digital euro is no longer an abstract concept. With PSP selection beginning this year and a live pilot scheduled for 2027, operational preparation is moving forward.
However, the decisive moment will be legislative. If EU co-legislators reach an agreement in 2026, the euro area could see its first central bank digital currency issued before the end of the decade. If negotiations stall, the timeline will slip.
For banks, PSPs and payment providers across Europe, the next 18 months will determine whether the digital euro becomes a defining pillar of the euro area’s financial architecture or remains a well-designed contingency plan.
Related: ECB Warns Europe Must Regain Control of Digital Payments and Finance