91����ԭ��

By continuing to drive the digital euro forward, the EU is signalling to financial institutions that they should prepare for its introduction, despite ongoing criticism and questions about the project.

The European Central Bank’s (ECB)  that it has completed the preparation phase, which began two years ago, is a significant step forward for the EU’s central bank digital currency (CBDC).

The focus will now shift from designing the concept of the digital euro and preparing a rulebook to ensuring technical readiness for its first issuance.

The digital euro represents the EU’s attempt to modernise the payments system through digital assets and is intended to give consumers in the euro area access to a secure, resilient public digital payment option.

“The euro, our shared money, is a trusted sign of European unity,” said ECB president Christine Lagarde. 

“We are working to make its most tangible form – euro cash – fit for the future, redesigning and modernising our banknotes and preparing for the issuance of digital cash.”

The digital euro still requires legislative approval before it can be formally introduced, a vital part of the work yet to be done.

As covered by 91����ԭ��, in October 2025, Fernando Navarrete, the MEP overseeing the digital euro legislation, announced likely deadlines for its progress, with a potential vote in the Committee on Economy and Monetary Affairs (ECON) expected by May 2026.

If legislation is introduced during 2026, a pilot exercise could begin in 2027, readying the Eurosystem for a potential first issuance of the digital euro in 2029.

Sovereignty and control

In advancing the digital euro project, the EU is moving ahead of other major central banks. 

The US has committed to a private sector-led approach to digital assets, based on stablecoins, and the Bank of England is taking a highly cautious approach, exploring the idea of a digital pound carefully before committing to implementation. 

This gives the EU a potential first-mover advantage among major economies in developing CBDCs, but also introduces risks of implementation challenges that may require course corrections.

The bloc has several motivations for pursuing a CBDC. A key goal is to reduce the euro area’s reliance on non-European providers, while also aiming to unify the fragmented payments landscape in the eurozone and support innovation and competition. 

Payments sovereignty is central to supporters’ thinking. Proponents argue that introducing a CBDC would strengthen the euro area’s resilience.

Concerns over the direction of travel in the US under President Trump have convinced key figures that the bloc needs domestic alternatives to the major US payments networks. 

Moreover, a CBDC would give authorities greater control than would be possible through, enabling focus on areas such as financial inclusion and operational resilience. 

“This is not just a technical project but a collective effort to future-proof Europe’s monetary system,” said ECB Executive Board member Piero Cipollone.

Preparing for the new era

The digital euro still faces significant challenges, with critics raising doubts over cost, complexity and public acceptance.

The project’s anticipated cost is substantial: the ECB estimates total development expenses at around €1.3bn until first issuance, with subsequent annual operating costs of approximately €320m from 2029. 

Political divergence, particularly between left and right, suggests that final legislation will require compromise between advocates and sceptics.

Banks and payment service providers (PSPs) also have concerns, particularly regarding disintermediation, despite the ECB’s attempts at reassurance.

Nevertheless, the EU’s continued commitment indicates that it intends to pursue the project through to issuance, meaning financial institutions should prepare for implementation.

Organisations should study the ECB’s proposals and timeline and assess how they will fit into the renewed ecosystem.

Banks and PSPs will need to evaluate the level of investment in infrastructure and integration required, given that the intermediation model places them in a central role in distributing the digital euro.

They must weigh the disintermediation risk against potential new revenue opportunities and assess how the competitive landscape could shift.

The CBDC will affect card networks, digital wallets and fintechs differently, creating both threats and partnership opportunities.

Financial institutions should monitor evolving interoperability standards and prepare to integrate new back-office systems and APIs. They must also determine how to handle disputes, failed transactions and potential fraud scenarios without the protections currently provided by the major card networks.

Organisations should conduct internal impact assessments on their systems and operations, and begin budget planning for implementation costs. The ECB has indicated it will continue engaging with stakeholders throughout this phase, making it crucial for banks and PSPs to participate in consultation processes.

Although legislative approval remains uncertain, the ECB’s progression to the next phase signals growing momentum. Organisations that begin preparation now will be better positioned to adapt when (and if) the digital euro becomes reality.