The Digital Euro: What the ECB’s Plan Means for the Single Currency

Key TakeawaysThe digital euro is designed to be a risk-free central bank currency that would complement cash and reduce reliance on non-European payment providers.The ECB sees the digital euro as a strategic project to boost the European currency.The earliest launch could be in 2028, if EU law is passed and the ECB opts to issue it.What the ECB Says About the Digital Euro

The digital euro is a new format designed to complement, but not replace, euro notes and coins. A digital form of cash, issued by the Eurosystem—the European Central Bank together with the national central banks of the euro area—it would be available to everyone in the euro area. It’s conceived as a risk-free currency for everyday payments. People and businesses could use it for making payments online, in stores and from one person to another. The ECB describes the digital euro as an “electronic form of cash for the digitalized world.”

It has not yet been decided whether the digital euro will be based on blockchain technology, but offline usability is considered essential.

European Central BankDigital Euro vs Stablecoins: Key Differences

The digital euro would be issued by the ECB, making it as risk-free as physical cash. The ECB has the mandate to maintain the value of the euro, whether it is in physical or digital form.

Stablecoins, by contrast, are privately issued crypto tokens that aim to maintain a 1:1 peg to a reference asset, such as the US dollar. Unlike money issued by a central bank, stablecoins depend on the credibility of the issuer’s pledge to preserve value over time, and issuers may also use personal data for commercial purposes, the ECB says.

Benefits of the Digital Euro for Europe’s Economy

Europe’s retail payments rely heavily on non-European platforms and services. A digital euro is meant to bolster resilience and strategic autonomy under European governance. “For the ECB, the digital euro is a strategic project, including as a way to gain independence from non-European payment providers,” says Ulrike Kastens, senior economist for Europe at DWS.

The digital euro could also enhance efficiency by enabling real time or near-instant settlements, lower fees by reducing intermediaries, and foster financial inclusion, says Claudio Wewel, foreign-exchange strategist at J. Safra Sarasin. It would also improve transparency, support anti-money laundering, and remain free of default risk, an advantage over private stablecoins, he says.

In the US, President Donald Trump issued an executive order in January banning federal agencies from working on a central bank digital currency, followed by the Genius Act in July, a first federal regulatory framework for a US dollar-backed stablecoin regime.

The ECB hopes this could add urgency to EU legislation for a digital euro. The measures by the new US administration “to promote crypto-assets and US dollar-backed stablecoins raise concerns for Europe’s financial stability and strategic autonomy,” Piero Cipollone, member of the executive board of the ECB, says.

“Data show that domestic card schemes are losing market share across Europe, while international schemes charge high fees to European banks and merchants,” he adds. “They could result not just in further losses of fees and data, but also in euro deposits being moved to the United States and in a further strengthening of the role of the dollar in cross-border payments.”

Will Europeans Accept the Digital Euro?

Surveys show that acceptance is rising: An ECB study found that likely users grew from 28% in 2022 to 45% in 2024. This trend is confirmed by several surveys conducted by national central banks, according to Cipollone.

According to a BearingPoint survey across nine countries, one in three respondents would use the digital euro, with one in five ready to use it multiple times a week. Preferred use cases are online and in-store shopping. Being free of charge (43%) and accepted everywhere (37%) would be the leading objective requirements.

DWS’s Kastens remains wary about public acceptance. “It is a very long-term project, and public acceptance remains uncertain,” she says. “What matters most are data security and cyber resilience.”

Impact on Non-Eurozone Payment Providers

Morningstar equity analyst Brett Horn says consumer choice ultimately drives industry trends. “We see few advantages that would prompt consumers to make a shift, and some real disadvantages relative to legacy systems,” a potential loss of rewards and security concerns being most prominent.

“For US players, stablecoins have become a hot topic and payment players are working to flesh out their offerings. While we do see some use cases for stablecoins, we are skeptical that we will see a large-scale shift toward stablecoins in consumer payments,” he adds.

Currently, nearly two-thirds of euro area card transactions are processed by non-European companies, while 13 euro area countries depend entirely on international schemes or mobile solutions. US providers like Mastercard, Visa, American Express, and apps such as PayPal, Apple Pay and Alipay dominate the market, according to an ECB survey.

Can the Digital Euro Boost the Euro’s Significance Relative to the Dollar?

While foreign exchange markets move on supply and demand, a currency’s status as a global reserve currency— money held by other countries in their reserves and widely used for trade and finance— depends on trust in a nation’s institutions, fiscal stability, and geopolitical influence.

Claudio Wewel of J. Safra Sarasin sees a rare opportunity for the euro to emerge as a credible alternative to the dollar, whose dominance as a global reserve currency is under pressure. “Tectonic shifts in US foreign policy, concerns about US fiscal sustainability and eroding trust in US institutions under President Donald Trump are increasing foreign investors’ efforts to diversify away from the currency,” he says. The digital euro is one avenue to strengthen the euro’s role in global markets, he adds.

Digital Euro Launch TimelineNov 2023—Oct 2025: Preparation PhaseOct 2025: Legislative process targeted for completion: Adoption by the European Parliament and Council, based on the European Commission’s proposal.Nov 2025 (earliest): The ECB Governing Council may decide on issuance, provided the legislative framework is in place. If approved, a launch would be possible two to three years later (earliest 2028).