The European Central Bank has confirmed that it will begin allowing blockchain-based transactions to settle in central bank money in 2026, as political attention increasingly shifts to the unresolved privacy questions surrounding the proposed digital euro.
In a statement released Friday, ECB executive board member Piero Cipollone said the institution is preparing to make distributed ledger technology settlements possible within its existing monetary infrastructure next year.
At the same time, he said the ECB is continuing technical work on the digital euro, a central bank digital currency that would function as a digital form of cash across the euro area.
The move marks a concrete step toward integrating blockchain-based systems into Europe’s financial plumbing.
Under the plan, transactions executed on DLT platforms would be able to settle directly in central bank money rather than relying on private intermediaries.
The ECB has argued that this is necessary to prevent fragmentation in tokenized markets and to ensure that new digital asset ecosystems continue to rely on a risk-free public settlement asset.
Cipollone said the digital euro infrastructure would also be designed to interact with other central bank digital currencies, allowing institutions to use it for cross-border payments.
He added that safeguards such as holding limits and the absence of interest payments would be built in to prevent large-scale shifts of deposits away from commercial banks, preserving their role in credit creation and monetary transmission.
The ECB’s technical preparations are largely complete, following a two-year preparation phase that ended in October 2025.
Source: ECB
The project has now moved into a readiness phase, with the central bank selecting potential system providers and testing settlement mechanisms.
However, officials have stressed that the ECB cannot proceed without a legal framework approved by EU lawmakers.
ECB President Christine Lagarde stated this week that the central bank’s design work is finished and that responsibility now lies with political institutions.
If the legislation is adopted in 2026, pilot transactions using the digital euro could begin in mid-2027, with the ECB aiming to be ready for a first issuance in 2029.
As the timeline becomes clearer, the debate over privacy has intensified.
The ECB has consistently said it does not support a programmable digital euro that would restrict how users can spend their money.