Digital Euro

The Digital Euro is a proposed Central Bank Digital Currency issued by the European Central Bank designed to complement physical cash and private payment systems, providing digital form of central bank money accessible to all eurozone citizens and businesses while maintaining ECB control over monetary policy and payment system stability.

The ECB's ongoing pilot program running from 2023 through 2026 focuses on privacy-preserving technologies enabling offline payments without transaction surveillance, pan-European financial inclusivity ensuring access regardless of location or banking status, and interoperability with commercial banks and payment service providers rather than disintermediating existing financial infrastructure. Implementation would align with MiCA regulatory framework and EU Payment Services Directive, ensuring coordinated approach to digital euro alongside private stablecoins like EURC.

Design priorities include strong privacy protections for low-value transactions while maintaining AML/CFT compliance for larger amounts, offline payment capability enabling transactions without internet connectivity similar to physical cash, holding limits preventing deposit flight from commercial banks to central bank accounts, and programmability allowing conditional payments and smart contract integration. The Digital Euro aims to preserve European monetary sovereignty amid rise of foreign payment platforms and stablecoins, provide resilient payment infrastructure less dependent on non-European technology providers, enable instant cross-border payments within eurozone, and ensure access to central bank money for all citizens in digital economy. Concerns include privacy risks from centralized transaction visibility, potential bank disintermediation if citizens prefer central bank accounts, technical complexity of pan-European infrastructure, and political resistance in member states wary of increased ECB control.