Digital euro legislation is running late. On November 10, European Central Bank Executive Board member Piero Cipollone warned lawmakers that further delays could push the currency’s potential first issuance beyond 2029. Negotiators, he said, need a deal before the end of 2026.
The timetable matters as the ECB prepares a 12-month pilot involving 36 payment providers in the second half of 2027. The beta currency will be tested with selected participants. Any public issuance still depends on legislation and a later ECB decision.
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Speaking to the European Parliament’s Committee on Economic and Monetary Affairs, Cipollone called for a year-end deal on the regulation needed to complete preparations. “A delay in adoption could instead postpone the introduction of the digital euro,” he said.
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Cipollone tied the timetable to European payment companies’ ability to compete. A delayed launch, he argued, could deepen reliance on foreign providers while leaving domestic businesses at a disadvantage.
The ECB wants to be ready for a potential first issuance in 2029 if the regulation is adopted this year. Legislation would supply the legal certainty needed to finish preparations and establish the basis for a possible issuance date.
Once the law passes, the ECB’s Governing Council must decide whether and when to issue the currency. The 2029 objective depends on the legislative process and that later decision.
EU Negotiators and the ECB Have Separate Decisions to Make
The European Parliament and the Council of the European Union have been negotiating with the European Commission in trilogues since July. Fernando Navarrete Rojas, a Spanish member of the European People’s Party, leads Parliament’s negotiating team. Ireland chairs the talks for member states.
The talks must settle the rules for banks, payment companies and merchants. Merchant fees remain unresolved, putting the proposed payment system’s commercial terms at the center of the final discussions.
According to Euronews, Ireland is aiming for a negotiating deal on November 18. Cipollone wants the broader process completed before the end of 2026, with adoption providing the legal basis for the ECB’s next steps.
The Council adopted its negotiating position in December 2025. Parliament’s economic affairs committee followed on June 23, 2026, approving its position by 43 votes to 14, with one abstention. On July 9, Parliament approved its negotiating mandate by 416 votes to 169, with 22 abstentions.
Those mandates cleared the way for negotiations on the final text. The regulation still needs to be adopted, the outcome Cipollone wants completed before year-end. EU leaders called in March for negotiations to conclude by the end of 2026. Another negotiating round took place on November 5, and the institutions are still working through the remaining issues as the ECB advances preparations.
Lagarde’s Departure Will Not Hold Up the Project, ECB Says
ECB President Christine Lagarde announced in October that she would step down on February 7, 2027, before the planned pilot. Alessandro Giovannini, adviser to the digital euro program manager, said at the Web Summit in Lisbon that the leadership change would not delay the project.
Giovannini called it “a European project” and described the work as strategic. He said he did not fear a change in leadership would affect it. The effort spans lawmakers, central banks and private payment companies.
The 2027 Pilot Will Test 36 Providers and Everyday Payments
The ECB selected 36 banks and payment firms in July, including Deutsche Bank, UniCredit and Stripe. In October, it chose network providers, including Nexi and Telefónica, to connect participants to its platform. More than 50 banks and nonbank financial companies applied.
ECB employees, national central bank staff and selected merchants will use a beta version of the digital euro without legal tender status. The exercise will test payment processes before any public issuance. Staff from 19 national central banks are expected to take part.
The 12-month exercise is scheduled to begin in the second half of 2027. Transactions will include cafeteria payments, person-to-person transfers and online purchases, testing both in-person and remote spending.
The ECB will assess reliability, payment processing and customer experience. It will examine how the system performs when payment providers, merchants and users interact, including whether transactions can be completed smoothly in ordinary purchasing situations.
A separate application process for online and mobile merchants opened in September. The selected businesses are expected to be announced in early 2027, adding another implementation milestone before the main pilot begins.
An innovation-testing round is also planned between January and June 2027. It will examine conditional payments and possible artificial intelligence applications, apart from the later 12-month pilot.
Giovannini said the first pilot transactions would arrive “in less than one year.” He described the companies building the system as European companies controlled by other European companies.
Consumer Costs and Merchant Fees Shape the Payment Proposal
Parliament’s negotiating position calls for free basic consumer services, including account opening and payments. It also requires businesses to accept the digital euro, subject to exemptions, and restricts fees charged to merchants and payment providers.
The proposed currency would support payments across the euro area, including transactions without an internet connection. Banks and other payment companies would need to adapt their systems before the service became available to the public.
Those provisions remain part of the legislative negotiations. The final terms will determine which consumer services are free and how merchants and intermediaries are compensated for providing payment services.
Cipollone said card payments in shops in 13 eurozone countries run entirely through non-European firms. International card schemes such as Visa and Mastercard underpin the dependence the ECB wants to reduce.
A shared European payment option would give local businesses another way to serve customers across the currency area. That objective makes the unresolved merchant-fee model consequential: payment companies and retailers need workable commercial terms.
Development Could Cost €1.3 Billion Before Issuance
The ECB estimates development expenditure at approximately €1.3 billion before first issuance. Annual operating costs are projected at approximately €320 million from 2029 under the potential issuance timetable.
Eurozone central banks would bear those costs, as they do for banknotes. The estimates cover building and running the system. Lawmakers are separately negotiating the fees that would apply within its payment model.
Giovannini cited more than 4,000 payment providers and millions of merchants when describing the scale of the eventual rollout. The 36-provider pilot is an initial testing group within that much larger payments ecosystem.
Implementation ranges from platform connections to coordination with the institutions that would deliver payments to customers. Banks preparing to distribute the currency will also have to adapt their systems and customer offerings.
Privacy, Reliability and Bank Deposits Shape Safeguards
Giovannini said offline phone-to-phone payments would check that a token was genuine without leaving a record identifying the payer and recipient. Demonstrating the idea with a €20 banknote, he compared the proposed exchange to handing over cash.
Offline payments would also face limits under negotiation by lawmakers, designed to address money laundering and terrorist financing. The limits balance the cash-like privacy described by the ECB against the controls required by legislation.
A T2 payment-system outage in early 2025 disrupted bank settlement for much of a day and drew criticism from European lawmakers. Markus Ferber of the European People’s Party questioned the ECB’s ability to run a digital euro after the interruption to its existing infrastructure.
The ECB responded that the proposed digital euro would be more comparable to its TIPS instant-payment system, which suffered only minor delays that day. Reliability is now among the issues the coming tests must address.
Bankers have raised concerns that customers could move deposits into ECB-guaranteed wallets. Parliament’s negotiating position includes individual digital euro holding limits, placing a safeguard around the amount users could keep in the new form of money.
Earlier political discussions linked those limits to financial stability and the risk of deposit outflows from commercial banks. The final rules will matter to banks preparing to distribute the currency and to customers who would use it.
Private Euro Stablecoins Advance Alongside the ECB Project
Qivalis, a consortium backed by 37 banks across 15 countries, received Dutch central bank authorization in October to operate as an electronic money institution. It plans a euro-denominated stablecoin subject to additional MiCA requirements, with distribution through banks, cryptocurrency exchanges and payment providers.
The proposed token has not entered circulation. Its planned private issuance would position it alongside a payment instrument distinct from the ECB’s proposed central bank money, leaving banks to manage parallel preparations as European digital-payment options develop.
The digital euro still has three next steps: finish the legislation, conduct testing and secure a Governing Council decision on issuance. The ECB’s 2029 objective depends on those decisions.
FAQ
Will Digital Euro Balances Pay Interest?
Giovannini said the digital euro would pay no interest, drawing a comparison with banknotes. Banks and fintech companies could offer their own rewards, separate from a yield on the currency itself.
Who Would Pay for the Shared Digital Euro Infrastructure?
Giovannini said the ECB would fund the shared infrastructure and offer it free to banks and other participating institutions. Merchant-fee arrangements are a separate part of the legislative negotiations, with the final compensation model still unresolved.
How Many Applications Did the ECB Receive for the Payment-Provider Pilot?
The ECB received more than 50 applications from banks and nonbank financial companies. It selected 36 providers for the planned testing exercise in the second half of 2027.
Staff From How Many National Central Banks Will Participate in the Pilot?
Staff from 19 national central banks are expected to take part, alongside ECB employees. Selected merchants and payment service providers will also participate in the beta exercise.
What Information Would Banks and the ECB Receive About Online Digital Euro Payments?
Giovannini said banks would know who paid whom in online transactions, as they do with existing payments. The ECB would receive pseudonymized data under the arrangement he described.
What Does the Single Currency Package Cover Besides the Digital Euro?
The package also addresses the legal tender status of euro banknotes and coins. It brings the proposed digital currency’s framework together with legislation concerning physical cash.
What Will the Separate January–June 2027 Innovation Tests Cover?
The ECB plans another innovation-testing round between January and June 2027. It will examine conditional payments and possible artificial intelligence applications, separately from the later 12-month pilot.
This article is for information only and is not financial advice.
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