ECB Confirms Digital Euro Test Set For 2027 After Provider Selection

The European Central Bank is advancing plans for a digital euro, moving into the selection phase for payment partners ahead of a multi-year pilot program designed to test how the currency could function within the existing financial system.

Good to Know

• Selection of EU licensed payment service providers is expected to begin in the first quarter of 2026.
• A 12 month pilot is scheduled to start in the second half of 2027.
• Test phase will involve a limited group of providers, merchants, and Eurosystem staff.

ECB Prepares Controlled Pilot With Banks And PSPs At The Center

Piero Cipollone, member of the Executive Board of the European Central Bank and one of the lead officials overseeing the digital euro project, outlined the next steps during a meeting of the executive committee of the Italian Banking Association.

Program will bring together a select group of payment service providers, retailers, and central bank personnel to simulate real world usage while maintaining a tightly managed environment. Selection of participating firms is expected to begin early in 2026, giving companies time to prepare before testing begins in 2027.

Approach reflects an effort to integrate a central bank digital currency without sidelining commercial banks, a concern repeatedly raised during consultations across the Eurozone.

Early Participants May Gain Operational Advantage

EU licensed PSPs will act as the main distribution channel for the digital euro, handling onboarding, transaction settlement, and liquidity processes during the pilot. Participation could give these firms a practical head start if the system later expands.

Cipollone said involvement allows companies to better estimate infrastructure requirements, compliance obligations, and staffing needs while contributing feedback that could shape the final framework.

Direct support from the Eurosystem is expected to give participants insight into technical architecture and cost structures that would otherwise remain uncertain until a broader launch decision.

Project Also Aims To Shield European Payment Ecosystem

Beyond experimentation with central bank money, officials see the initiative as a way to reinforce domestic payment networks that compete with global providers.

Pilot is intended to support local schemes such as Italy Bancomat and Spain Bizum, both of which play a significant role in regional transactions but face pressure from international card networks.

Cipollone said:

“Banks could lose their role in payments not just because of stablecoins but also due to other private solutions. The cap on the fee that merchants will pay on the digital euro network will be lower than what the international payments network, normally the costlier, charge, but higher than what domestic payments scheme, normally the cheapest, charge.”