ECB President Christine Lagarde has called for European Union legislation establishing the digital euro to be approved by the end of 2026, saying the move is central to developing a secure digital equivalent of cash.
Speaking at the IMF Annual Meetings in Bangkok on October 17, Lagarde said money needed to adapt to the demands of an increasingly digital economy. She presented the digital euro as the European Central Bank’s planned bloc-wide central bank digital currency (CBDC).
The project is intended to provide a digital alternative to cash while encouraging innovation in payments. It is also designed to help Europe maintain sovereignty and strategic autonomy in the financial sector.
“To lay the groundwork for a seamless and secure launch, we will run a 12-month internal pilot in the second half of 2027,” Lagarde said.
That timetable points to a possible wider introduction of the digital euro in 2028 or 2029, although the necessary legislation must first be agreed and adopted.
The ECB has selected 36 payment providers to take part in the pilot. The programme will examine core elements of the proposed network, including payments, account creation, merchant acceptance and offline functionality.
Lagarde said the legal framework was a crucial step before the pilot and any subsequent launch could proceed. In July, the European Parliament moved a single-currency package into the negotiation phase. The package covers the issuance of the digital euro, the provision of digital euro payment services in countries outside the EU, and an additional provision concerning cash and banknotes.
The final regulatory text will need to be negotiated with the Council before it can come into force.
The ECB has also argued that central bank money offers advantages over privately issued stablecoins, whose use has increased as digital payment instruments. European Central Bank Executive Board member Isabel Schnabel made that case in August.
Lagarde has warned that widespread use of stablecoins as substitutes for money could lead to the “privatization of money”. She said that could create systemic risks for the financial system because central banks would have less ability to implement effective monetary policy.
The EU is therefore promoting the digital euro as a sovereign alternative to stablecoins led by US-based companies. The Trump Administration has backed the development of such digital assets as a way of “protecting the sovereignty of the United States dollar”.
That position was set out in Executive Order 14178, titled “Strengthening American Leadership in Digital Financial Technology”.
