ECB: Digital Euro Launch Unlikely Before 2029
- The European Central Bank is targeting 2029 for a digital euro launch, citing legislative and technical hurdles. It will function as a central bank-backed digital wallet.
The European Central Bank (ECB) views 2029 as the earliest realistic timeline for the launch of a digital euro, according to ECB board member Piero Cipollone (pictured). He said the project, which is envisioned as a central bank-backed online payment wallet, is contingent on significant legislative progress. Cipollone made these remarks during an appearance at Bloomberg’s Future of Finance event.
Navigating the Legislative Process
The ECB is currently awaiting the respective legislative positions from the European Parliament, European Council, and European Commission. These bodies are expected to have their stances prepared by May of the coming year. Following this, a joint effort on the necessary legislation will commence.
Once that legal framework is established, the ECB will require between two-and-a-half and three years to implement the digital currency. This technical phase involves significant development and testing to ensure the digital euro is secure and functional. The entire process highlights the meticulous, multi-stage approach required to introduce a new form of currency.
Project Scope and Technical Hurdles
The digital euro is designed to complement existing banknotes and coins, providing a common electronic payment option across the euro area. It aims to reduce reliance on non-European payment providers and strengthen the euro’s role in the global financial landscape. The project’s technical phase involves developing user interfaces and ensuring the system adheres to strict privacy and anti-money laundering regulations.
While the ECB has made progress in its preparation phase, which began in late 2023, the complexity of the project is evident. The central bank must address concerns from commercial banks about potential deposit shifts and ensure the currency’s design protects both consumers and financial stability. The timeline reflects the need for careful development to avoid unforeseen issues.
Global Trends
The ECB’s initiative is part of a broader global trend of central banks exploring their own digital currencies (CBDCs). Over 130 countries are currently investigating or developing a CBDC. The Bank for International Settlements (BIS) reports that many central banks are also exploring cross-border CBDC payments to enhance efficiency.
The United States, while exploring a digital dollar, has been more cautious, with a lack of a clear timeline for its own project. The development of a digital euro could position the European Union as a leader in this area, while also serving as a response to the growing popularity of private cryptocurrencies and stablecoins, many of which are backed by the U.S. dollar.
