The Digital Euro: Implementation starts here

The Digital Euro is moving from design into delivery planning and market mobilisation with growing clarity over the requirements for banks — and future commercial upsides. Now is the time to begin active planning and preparation for this major Eurosystem initiative.

In 2024, our previous article on the Digital Euro updated banks on this new form of the Euro, intended to complement cash, promote financial inclusion, support innovation, and create a Euro-area digital payment system. At that time, the project was entering the preparation phase, based on the requirements identified during the investigative phase.

Since then, the Digital Euro has advanced significantly. October 2025 saw the conclusion of the preparation phase, and agreement by the ECB’s Governing Council to deepen technical work and market engagement. Recent weeks have seen an uptick in stakeholder communication, and a December 2025 ECB blog stated that – given adoption of the Digital Euro Package in 2026, and final Governing Council approval – the first Digital Euro could be issued in 2029, with pilot exercises and initial transactions as soon as 2027.

Many early uncertainties about the Digital Euro have now been resolved. Some of its key features include:

A two-tier model, with the ECB issuing Digital Euro while banks and payment service providers (PSPs) act as intermediaries.
Intermediaries providing end user services via Digital Euro wallets, with a maximum holding limit intended to preserve financial stability.
Integral capabilities for offline payments, to ensure resilience and inclusion.
Strict privacy features, including anonymous offline transactions and no ability for the Eurosystem to link transactions with individuals.
Standard AML/CFT and other compliance checks carried out by intermediaries when users fund or defund their Digital Euro wallets.

Even so, questions remain - such as the precise holding limits for Digital Euro wallets. The commercial implications of the core Digital Euro proposition are also unclear. The ECB expects merchant fees to generate similar revenues to other digital payments, but will these be enough to offset operating costs and generate a return on banks’ capital investment?

Set against that, there are potential upsides too, with scope for banks to add value-adding features such as conditional payments. The ECB’s engagement with the Euro Retail Payments Board has identified several ways for the Digital Euro to foster greater innovation and competitiveness, such as:

Strengthening the European payments ecosystem

Improving bargaining power and reach for euro-area intermediaries and merchants by reducing dependence on non-European payment rails and schemes.
Maximising synergies

Using open standards to integrate the Digital Euro into payment solutions — reducing disintermediation risks, providing low-cost interoperability, and cutting reliance on international card schemes.
Creating a ‘common acceptance layer’

Providing a single Euro-area platform for A2A and POS transactions — giving banks and PSPs cross-border reach without the need for proprietary acceptance networks.
Developing a staggered roll-out approach

Establishing a shared roadmap for deployment — defining use cases, prioritising essential applications, spreading cost over time, and building broad adoption.
Enabling ‘digital euro as a service’

Giving intermediaries the choice between ‘build, buy or partner’ approaches — helping to mutualise investment and operating costs.

All of these developments on the retail Digital Euro are also taking place within the context of a fast-evolving payments landscape also for wholesale products. In the ‘horizon scanning’ conclusion to its supervisory priorities for 2026-28, the ECB identifies the rapid growth of stablecoins (currently largely USD-denominated) as a source of potential risk to European payments integrity and monetary sovereignty. The ECB is monitoring developments, and will engage actively with financial institutions to ensure robust risk management.

This background underpins the effort and urgency behind the Digital Euro. Regardless of their views about the project, banks should now be actively building Digital Euro readiness into their payments strategies and change roadmaps. Actions to consider taking could include:

Defining operating models, including levels of intermediation, customer support responsibilities, wallet strategy, onboarding approaches, and interaction with existing payment products.
Mapping key processes such as customer identification and authentication, KYC checks for online payments, the funding and defunding of digital euro wallets, and related control and reconciliation processes.
Assessing technology and architecture implications, including integration with existing payment rails and core banking systems, channel and wallet deployment choices, offline payment capabilities, and resilience and availability requirements.
Modelling balance sheet and economic impacts, factoring potential digital euro liquidity behaviour into stress test scenarios, and assessing implementation and run-cost implications relative to expected revenues.
Actively planning for innovation by identifying additional features that could be layered on top of the core digital euro Rulebook requirements once the foundational infrastructure is in place.

In the absence of a pan-European private-sector instant payment solution that meets EU lawmakers’ public policy objectives, the digital euro will soon be a reality. Banks should begin to prepare not only for the requirements of this major initiative, but also for its potential opportunities.