ECB Concludes Digital Euro Technical Phase, Shifting Authority to EU Legislators

The European Central Bank (ECB) confirmed the substantial completion of its technical and preparatory work for a potential digital euro, marking a significant procedural pivot in late 2025. Following a final press conference on December 18, 2025, ECB President Christine Lagarde announced that the project's focus is now transitioning to the political sphere. This critical shift places the responsibility for authorization squarely on the European Council and the European Parliament to deliberate on the legislative aspects of the proposed retail Central Bank Digital Currency (CBDC).

The ECB's mandate, which spanned from November 2023 to October 2025, involved designing the architecture, selecting technology providers, and drafting a comprehensive rulebook for the digital currency to function seamlessly across the 20 eurozone nations. President Lagarde articulated the bank's current position, stating the ECB has completed its internal groundwork. The next step requires lawmakers to assess the European Commission's initial legislative proposal, submitted in 2023, to either transform it into binding legislation or amend its provisions. The digital euro is conceptualized as a public, widely usable currency possessing legal tender status, intended to bolster financial stability, monetary sovereignty, privacy, and inclusion as cash usage declines.

This procedural milestone arrives amid heightened geopolitical and technological pressures influencing European payment strategy. Former ECB Executive Board Member Piero Cipollone had earlier in 2025 emphasized the urgency for a digital euro, citing shifts in United States stablecoin regulation. In contrast, U.S. President Donald Trump signed an executive order in January 2025 that explicitly prohibited federal agencies from establishing, issuing, or promoting CBDCs, effectively halting American development in that area while the U.S. maintained a comparatively permissive stance toward regulated stablecoins throughout 2025.

The system is designed to offer cash-like privacy for offline transactions while adhering to anti-money laundering regulations for online use. To mitigate risks such as a destabilizing outflow of funds from commercial bank deposits, the ECB has proposed introducing holding limits, potentially capping initial holdings between three to five thousand euros. While the technical engine is prepared, the ultimate issuance decision remains political, contingent upon the legislative process.

If the co-legislators—the European Parliament and Council—adopt the necessary Regulation during 2026, the project could advance to a pilot phase starting in mid-2027, with the Eurosystem aiming for a potential first public issuance toward the end of the decade, possibly in 2029. This timeline is strategically aligned with the regulation of euro-backed stablecoins under Europe's Markets in Crypto-Assets (MiCA) framework. This European push for a sovereign digital currency contrasts with warnings from the International Monetary Fund (IMF), which has cautioned that digital money could introduce new strains on the global financial safety net, stressing that regulation is necessary for countries to retain control over monetary policy.

The ECB's stated goal of providing a secure public digital anchor directly addresses these systemic risks identified by international bodies. The successful completion of the technical blueprint now sets the stage for complex political negotiation that will define the future architecture of European payments.