The digital euro launch planned for 2029 will mark a major step in Europe’s move towards digital payments, with the European Central Bank (ECB) set to become the first major Western central bank to issue a retail central bank digital currency (CBDC).
The project follows more than a decade of preparation and aims to reduce the eurozone’s dependence on private cryptocurrencies and major US-based electronic payment providers, while strengthening Europe’s monetary autonomy.
EU legislation expected by year-end
The European Parliament, European Commission and Council of the EU are expected to complete negotiations on the final legal framework by the end of the year.
This would pave the way for the ECB’s official approval of the digital euro on 1 January 2027, 25 years after euro banknotes and coins entered circulation.
The final issuance is expected in 2029.
Digital currency and European autonomy
The rapid growth of dollar-based stablecoins and the adoption of the GENIUS Act in the United States have accelerated discussions around the digital euro.
The ECB aims to ensure that central bank money, and therefore the euro itself, remains a key foundation of a rapidly changing payment system increasingly based on digital technology and tokenisation.
The initiative forms part of a broader ECB strategy to modernise European payment systems across retail and wholesale transactions, business-to-business payments and cross-border transfers.
What is a CBDC?
A central bank digital currency (CBDC) is an electronic form of money issued directly by a central bank.
Currently, households and businesses can only hold central bank money in the form of cash, while commercial banks have access to digital central bank money through their reserves held at the ECB.
By contrast, the digital money held by citizens in bank accounts today represents commercial bank money rather than central bank money.
With a CBDC, households and businesses would be able to hold digital central bank money for the first time.
Global CBDC development expands
So far, only three countries have fully launched CBDCs: the Bahamas, Jamaica and Nigeria.
According to the Atlantic Council, 146 countries and monetary unions, representing around 98% of global GDP, are exploring the development of a CBDC.
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