European Central Bank Moves Ahead With CBDC Rollout Plans

The European Central Bank (ECB) has officially approved the next phase of its digital euro initiative, moving closer to launching a central bank digital currency (CBDC) by 2029. The move follows two years of groundwork that refined the project’s technical design and identified key development partners.

Good to Know

• The ECB plans pilot tests beginning mid-2027, pending EU legislation.
• Users will be able to hold between €500 and €3,000 in digital euros.
• Development costs are projected at €1.3B, with annual operations around €320M.

The ECB describes the digital euro as a free public complement to cash, designed to strengthen payment resilience and independence across Europe while maintaining financial stability.

According to the ECB’s Governing Council, the digital euro will serve as a secure, privacy-protected payment method usable both person-to-person and in retail transactions. It will coexist with physical cash rather than replace it, allowing consumers to pay digitally with direct backing from the central bank.

The bank emphasized accessibility for vulnerable populations and stressed that privacy has been a guiding design principle. The current model supports anonymous offline transactions up to certain limits, aiming to provide privacy protections similar to cash while still allowing safeguards against illicit activity.

Addressing Cash Decline and Payment Dependence

ECB data shows that cash now accounts for just 24% of daily payments in the eurozone. Meanwhile, nearly two-thirds of all card payments in Europe rely on non-EU providers, raising concerns about the region’s dependency on foreign payment networks.

The digital euro aims to tackle both issues — offering a public digital payment option that supports European payment autonomy and strengthens the bloc’s financial infrastructure.

“A digital euro would help future-proof Europe’s payment system and ensure everyone has access to a public means of payment, both online and offline,” an ECB spokesperson said.

Balancing Privacy and Financial Stability

Under the proposed model, holding limits between €500 and €3,000 will be imposed to prevent major outflows from commercial banks. The ECB says these caps are essential to protect financial stability and ensure that the digital euro functions as a payment tool, not a store of wealth.

Critics, however, say the design prioritizes protecting banks rather than promoting innovation and competition. Privacy advocates have also questioned whether digital transactions can ever truly match the anonymity of cash.

Despite such debate, the ECB maintains that the system’s privacy-preserving architecture will make the digital euro one of the most secure and transparent CBDCs globally.

The project’s next phase will run until 2027, focusing on development and technical testing. Pending EU legislation in 2026, pilot programs are expected to begin in mid-2027 across select financial institutions.

If successful, the ECB plans to issue the digital euro to the public by 2029. By that time, the initiative could reshape the European payments landscape — offering citizens a digital counterpart to cash and reducing reliance on non-European payment infrastructure.

FAQ

What is the digital euro?

It’s a proposed central bank digital currency (CBDC) issued by the European Central Bank to complement physical cash and offer a secure public payment option.

When will it launch?

The ECB aims to begin pilot testing in 2027 and full public rollout by 2029, pending legislative approval.

Will the digital euro replace cash?

No. The ECB has emphasized it will complement cash, not replace it, ensuring continued access to physical currency.

How much will development cost?

Total costs are estimated at €1.3 billion for development and €320 million annually for operations.

What about privacy concerns?

The ECB says the digital euro will use privacy-preserving architecture, allowing limited anonymous offline use while meeting anti-money laundering rules.