ECB Races Toward Digital Euro, But Legislative Delays Loom

With the goal of finishing the preparatory stage by October 2025, the European Central Bank (ECB) is stepping up its efforts to establish the framework for a digital euro. Christine Lagarde, president of the European Central Bank, emphasized that legislative approvals are necessary to move forward. “We have October 2025 as our deadline, and we are preparing for that date, but we will not be able to proceed until the other parties, or stakeholders as I refer to them, the commission council, and parliament, actually finish the legislative process,” she said.

Although Lagarde identified October 2025 as a significant turning point, according to ECB papers, the preparation stage will formally end in November 2025. This phase, which began in November 2023, has concentrated on technical designs, legal frameworks, and stakeholder feedback collection. The ECB’s Governing Council will decide whether to move forward after it is finished. The digital euro might not be introduced until 2028, according to analysts, including those from the Deutsche Bundesbank.

Retail and Wholesale Functions in Focus

The digital euro will serve both retail and wholesale purposes. The retail version will allow public use, featuring free basic transactions, offline payment capabilities, and privacy safeguards that prevent the ECB from tracking individual transactions. Meanwhile, the wholesale version will cater to financial institutions, leveraging blockchain technology for faster interbank settlements and cross-border payments. Both components aim to strengthen the euro’s competitiveness amid rising digital currency adoption.

Despite its potential, the digital euro faces several challenges. Privacy concerns remain a major issue, with critics warning that increased monitoring could infringe on users’ financial privacy. Additionally, some fear that a retail digital euro might reduce traditional bank deposits, prompting discussions on potential holding limits. To address these concerns, the ECB has committed to maintaining high privacy standards.

The ECB has also explored blockchain technology for the digital euro. The European Investment Bank (EIB) issued a digital bond on Ethereum, while the Banque de France tested Ethereum for central bank digital currency (CBDC) transactions. Other blockchain platforms have also been examined, but details remain scarce.

The ECB faces growing pressure to act as other global players advance in digital currency development. China’s digital yuan has already made significant strides, reportedly using Chang’an Chain for blockchain-related functions. Meanwhile, U.S. dollar-backed stablecoins continue to dominate the digital payment space.

Lagarde framed the digital euro as essential to preserving the euro’s global standing. However, with legislative approvals still uncertain, the timeline for its launch remains in flux. While the ECB remains committed to its October 2025 deadline, the broader regulatory and technical landscape suggests that full implementation may not occur before 2028.