The Governing Council of the European Central Bank (ECB) has shared the latest updates on the next phase of its digital euro project, confirming its intention to launch a pilot phase starting in 2027.

The euro area central bank confirmed that, if legislation is in place during 2026, it will be possible to launch a pilot phase ahead of the first potential issuance of the digital euro in 2029.

In its report, it confirmed that the preparatory phase, which began in November 2023, had been successfully completed, with the next phase of the digital euro project aiming to ensure technical readiness for the first issuance.

The financial body added that the move is in line with a call from European leaders for the acceleration of progress at the recent Euro Summit in October.

“A digital euro will preserve Europeans’ freedom of choice and privacy and protect Europe’s monetary sovereignty and economic security,” the ECB said.

The final cost of the digital euro, both for development and operation, will depend on its final design, including components and related services that are yet to be developed.

However, the total development costs, including both internally and externally developed components, are estimated at around €1.3 billion until the first issuance, currently planned for 2029.

Subsequent annual operating costs are estimated at around €320 million per year from 2029 onwards.

The bank is now waiting to see whether European co-legislators will adopt, as expected, the regulation on the establishment of the digital euro in 2026, clearing the way for a pilot exercise and the first transactions in mid-2027.

The entire Eurosystem should then be ready for a potential first issuance of the digital euro during 2029.

The final decision by the ECB Governing Council on whether to issue a digital euro and the date of issuance will only be taken after the legislation has been adopted.

“The euro, our shared money, is a trusted sign of European unity,” said ECB President Christine Lagarde. “We are working to make its most tangible form – euro cash – fit for the future, redesigning and modernising our banknotes and preparing for the issuance of digital cash.”

The bank also stressed the urgent need for a public digital payment system given changing payment habits and the decline in cash payments.“The digital euro will complement cash and bring its benefits – simplicity, privacy, reliability, availability across the whole euro area – to digital payments,” it said.

“This is not just a technical project but a collective effort to future-proof Europe’s monetary system,” added ECB executive board member Piero Cipollone, who also chairs the High-Level Task Force on the digital euro project.

He added that a digital euro will ensure that people can continue to enjoy the benefits of cash in the digital era.

“In doing so, it will enhance the resilience of Europe’s payment landscape, lower costs for merchants, and create a platform for private companies to innovate, scale up and compete,” continued Cipollone.

---