That’s assuming national governments and the European Parliament agree on a legal framework next year, with potential issuance possible in 2029, the central bank (ECB) announced Thursday (Oct. 29).
“As payment habits evolve, and cash payments decline compared with digital transactions, the need for a public digital means of payment – complementary to cash – has become increasingly urgent,” the announcement said. “The digital euro will complement cash and bring its benefits – simplicity, privacy, reliability, availability across the whole euro area – to digital payments.”
However, the ECB’s announcement said that — in addition to the regulation establishing a digital euro — it is also backing a proposal from the European Commission to reinforce consumer’s right to continue to pay with cash.
“This is not just a technical project but a collective effort to future-proof Europe’s monetary system,” said ECB Executive Board member Piero Cipollone, who chairs the High-Level Task Force on a digital euro. “A digital euro will ensure that people enjoy the benefits of cash also 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.”
The announcement follows a report from Bloomberg News Wednesday (Oct. 29) that the ECB was targeting 2029 for the launch of its central bank digital currency (CBDC).
As that report noted, pressure is increasing for the EBC to find a solution, with policymakers unhappy about depending too much on payment giants in the United States such as Visa, Mastercard and PayPal.
Adding momentum to the debate are concerns that dollar-backed stablecoins could become more popular in Europe amid the U.S.’s pro-digital assets stance.
Meanwhile, the Federal Reserve has long flirted with the idea of a CBDC in the U.S., holding conferences, issuing discussion papers and calling for exploratory studies. However, “the Fed’s progress has been cautious, bordering on passive,” as it has made no commitments to develop or pilot a retail CBDC, PYMNTS reported July 18.
“Fed Chair Jerome Powell has consistently said that such a move would need clear support from the executive branch as well as authorization from Congress,” the report said. “That position may be politically prudent, but it also reflects a gridlock… Still, the political momentum favors stablecoins, not central banks. A U.S. CBDC would represent a public alternative to the privately issued stablecoin solutions promoted by the crypto industry.”
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