ECB takes next step in preparing for digital euro
The Governing Council of the European Central Bank (ECB) has decided to proceed to the next phase of the digital euro project, aimed at making the Eurosystem technically ready for a potential initial issuance of a digital euro. This does not mean that a decision has been made to introduce or launch a digital euro; the legislative process in Brussels is ongoing. The preparation phase that started in November 2023 has now been completed.
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The digital euro is a public means of payment that can be used everywhere in the euro area alongside cash for everyday transactions, both offline and online. This means that public money will be available to consumers in the digital domain as well. The digital euro brings freedom of choice and privacy for users, while also supporting Europe’s monetary sovereignty and economic security.
In the new project phase, the Eurosystem will continue to work on technical aspects (system design, testing and pilots), market engagement (collaboration with banks, payment institutions, merchants and consumers) and supporting the legislative process. The legislative process must be completed first before the ECB, together with the central banks in the euro area, decides on issuing a digital euro. This means issuance could take place in 2029 at the earliest.
Safeguards will be built into the design of the digital euro, such as a maximum balance per individual, to help prevent any financial stability risks. Furthermore, the costs for banks will be contained and similar to costs for implementing the Payment Services Directive, according to ECB estimates. Annual operating costs are estimated at around €320m. As with banknote production, these costs will be borne by the Eurosystem, and are expected to be covered by the generated seigniorage, despite being lower for the digital euro than for outstanding coins and banknotes.
See also: ECB press release: Eurosystem moving to next phase of digital euro project