ECB enters next phase of digital euro development

The European Central Bank (ECB) has moved the digital euro into its next phase, shifting the project from planning to technical preparation, with the Eurosystem aiming to be ready for a potential first issuance in 2029, provided the relevant EU legislation is adopted in 2026, according to the ECB’s latest progress update and the Bank of Greece’s annual report. 

A key feature of the proposed digital currency is offline use. The ECB says offline payments are designed to offer “cash-like privacy levels”, with transaction details known only to the payer and the payee, making the digital euro the closest digital equivalent to cash.  

The latest stage of the project began after the ECB decided in October 2025 to move to the next phase of the digital euro project.  

In this phase, the Eurosystem is building the technical capacity needed ahead of any eventual decision to issue, while keeping the work aligned with the legislative process. 

This phase, covering October 2025 to September 2027, focuses on technical readiness and operational preparation. It centres on developing infrastructure and standards, preparing pilot testing and stepping up work with market participants to finalise the rulebook, with the aim of ensuring that the digital euro can operate safely and reliably across the euro area if it is eventually launched. 

That stage follows the earlier exploration phase and the subsequent preparation phase. The first focused on assessing the project’s feasibility and defining its key principles, including privacy, accessibility and the position that the digital euro should complement cash rather than replace it.  

The second, which ran from November 2023 to October 2025, marked the shift from concept work to practical design with banks and other payment service providers.  

One of the main steps in that second phase was the development of the draft digital euro rulebook, which sets out a single set of rules, standards and procedures for digital euro payments across the euro area, as well as the roles and obligations of participants in the wider ecosystem.  

The ECB says “the rulebook is being developed through a collaborative process with market participants and is intended to support consistency, interoperability and legal certainty.” 

The next step is expected to include pilot activity. According to the ECB, selected payment service providers would test the system’s technical, functional and operational readiness in a controlled environment ahead of any formal decision on issuance. 

However, the launch is not automatic. The ECB has made clear that the final decision on whether to issue the digital euro, and on what date, will only be taken once the regulation establishing it has been adopted. 

In its annual report, the Bank of Greece says the digital euro matters because it would strengthen monetary sovereignty in the euro area, improve the resilience of European payments and offer a public alternative to private payment instruments, while also supporting innovation and financial inclusion.