The European Central Bank (ECB) has completed the initial two-year investigation phase of its digital euro project and will now implement a two-year preparation phase that will cover the finalisation of a digital euro rulebook, the selection of providers to develop a digital euro platform and infrastructure, as well as testing and experimentation across a range of use cases for the central bank digital currency (CBDC).

The ECB’s governing council has now ratified the decision to move the project to the preparation stage following the publication of the bank’s A stocktake on the digital euro report that summarises the findings of the project’s investigative phase.

According to the report, “the ECB has designed a digital euro that would be widely accessible to citizens and businesses through distribution by supervised intermediaries, such as banks”.

“The design envisages the digital euro as a digital form of cash that could be used for all digital payments throughout the euro area,” the ECB adds.

“It would be widely accessible, free for basic use and available both online and offline. It would offer the highest level of privacy and allow users to settle payments instantly in central bank money.

“It could be used from person to person, at the point of sale, in ecommerce and in government transactions.”

Next steps

During the preparation phase, the ECB will focus on “finalising the digital euro rulebooks and selecting providers that could develop a digital euro platform and infrastructure” and carry out testing and experimentation in order “to develop a digital euro that meets both the Eurosystem’s requirements and user needs, for example, in terms of user experience, privacy, financial inclusion and environmental footprint”, the central bank says.

At the end of the two-year phase, the ECB’s governing body will decide whether to move to the next phase that will “pave the way for the possible future issuance and rollout of a digital euro”.

The launch of the preparation phase, however, is “not a decision on whether to issue a digital euro” and that decision “will only be considered by the governing council once the European Union’s legislative process has been completed”.

The ECB officially launched the digital euro project in July 2021, laid out design options for the digital currency in January 2023 and set out a timeline for a digital euro rollout in March.

A working group of Spanish banks and payment services providers completed a proof of concept trial for digital euro transactions that showed the proposed CBDC can run on existing payment rails earlier this month.

• The European Central Bank’s digital euro programme director Evelien Witlox recently reported on the ongoing development of the digital euro for NFCW’s Contactless World Congress. Watch the presentation here.

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