The European Central Bank (ECB) has announced further steps in its work to introduce a digital euro, while stressing that cash will continue to be issued and remain available for payments across Europe.
In his latest statement to the Committee on Economic and Monetary Affairs of the European Parliament, ECB Executive Board member Piero Cipollone said preparations for the digital euro are advancing, with legislative and technical frameworks moving forward.
Cipollone says the European Union Council targets agreement on draft digital euro legislation by the end of 2025, and lawmakers in the European Parliament are currently defining their position.
Cipollone cited recent Eurosystem research showing that 66% of Europeans have expressed interest in trying the digital euro after being informed about it.
The business community have highlighted the potential for simplified and less costly digital payment acceptance.
Currently most euro area countries rely heavily on international card schemes for day-to-day retail digital payments.
The ECB says that 15 out of 20 euro area countries lack a significant domestic solution for shop payments, and over half lack a widely accepted local system for online transactions.
International card schemes settle approximately two-thirds of all card-based transactions in the euro area.
Banks’ role in distributing the digital euro
Cipollone outlined that banks will play a central role in distributing the digital euro, which is intended to function in a similar way to cash.
Like physical money, digital euro holdings will not earn interest, and caps will be placed on digital euro accounts to prevent large transfers from commercial bank deposits.
Technical reviews indicate no adverse impact on financial stability from introducing the digital euro.
According to the ECB banks would benefit from the digital euro through savings on scheme and settlement fees.
The ECB board member confirmed that the digital euro would complement existing euro banknotes and coins, not replace them.
Ongoing work to redesign and enhance security features on euro banknotes is continuing, demonstrating a continued commitment to physical cash.
Digital euro transactions made offline would offer privacy comparable to cash, with only the payer and payee able to view details, ECB points out.
Banks would continue routine checks to prevent fraud, money laundering and financing of terrorism.
A decision on issuing the digital euro will only be taken after legislation is approved.
If the legal framework is adopted next year, pilot exercises and first transactions could begin as early as mid-2027. The digital euro could be ready for wider rollout in 2029.
