The European Central Bank (ECB) has moved the digital euro project to its next phase, with the technical phase officially commencing on October 30, 2025, within the European Union. This transition follows a comprehensive two-year preparation phase, during which significant progress was made and detailed in a published report. The advancements signal a pivotal step towards integrating a digital currency, which could have substantial implications for stablecoin markets and necessitate considerable investment from various stakeholders. Further progress is contingent upon the enactment of new EU legislation.
ECB Governing Council Leads Digital Euro Development
The ECB Governing Council has been at the forefront of driving the project through its various stages, enjoying strong support from European political leaders. A key decision made during this period is the planned integration of the digital euro as a complementary option to physical cash. This integration requires the development of new legislative frameworks to govern its use and operation.
Infrastructure Investment for Digital Euro
Officials have emphasized that the digital euro is designed to coexist with cash, not to replace it, thereby aiming to enhance the overall monetary system by providing consumers with a broader range of payment choices. The ECB has outlined an anticipated financial commitment for the project, estimating an allocation of €4.0 to €5.8 billion for the necessary system-wide upgrades. This investment is intended to support the projected technical capacity building requirements, including the development of secure transaction systems and robust technical integration.
Lessons from Past Central Bank Digital Currency Trials
The strategy for the digital euro is informed by insights gained from previous Central Bank Digital Currency (CBDC) trials conducted globally. For instance, China's digital yuan experiments have shown varied effects on crypto markets, with central bank-issued digital currencies being fundamentally different from decentralized crypto assets. Earlier trials in countries like Sweden have also provided valuable lessons, highlighting approaches tailored to specific national economic contexts.
Industry experts anticipate that the full impact of the digital euro on markets, particularly on stablecoins, will become more apparent after the relevant legislation is passed in 2026. Analysis to date suggests that strong leadership and clear direction are crucial for ensuring a seamless transition and effective integration of the digital euro into existing financial infrastructures.
"The ECB summarises two years of work from November 2023 to October 2025, covering rulebook development, provider selection, experimentation, technical design, and stakeholder engagement." - Christine Lagarde, President, European Central Bank