The European Central Bank (ECB) is moving toward a pilot of a digital euro in 2027, but the law that would allow it to be issued has not yet been adopted. This article explains what the proposed currency is, how its main design choices work and which questions are still open.
What is the digital euro, and what is it not?
According to the ECB, the digital euro would be a digital form of central bank money, issued by the Eurosystem (the ECB together with the national central banks of euro area countries). The ECB describes it as an electronic equivalent to cash that would complement banknotes and coins rather than replace them. It would work online, in shops and between people, and it would have legal tender status, meaning that, in the ECB’s words, everyone would be able to use it for payments.
The term for this kind of instrument is a central bank digital currency, or CBDC. The key idea is who owes the money. A balance in an ordinary bank account is a claim on a commercial bank. Banknotes are a claim on the central bank. A digital euro would be a claim on the central bank too, but held electronically.
That makes it different from the privately issued tokens already in circulation. The ECB’s own comparison is direct: stablecoins are created by private companies and are not guaranteed by a central bank or public authority, so their stability depends on the issuer’s reserves and finances. Crypto-assets such as Bitcoin or Ether are not backed by any institution, and their prices can swing sharply. For a deeper look at the private-token side, see our explainer on stablecoins and what can go wrong.
Where does the project stand today?
The ECB’s Governing Council decided in October 2025 that the project would move to its next phase. The ECB’s project page lists a large-scale market consultation on the scheme rulebook between June and October 2025, and a draft rulebook, version 0.91, published in July 2026. A rulebook is the set of common rules and standards that banks and payment providers would follow so a digital euro behaves the same way everywhere.
Several dated steps in recent months are recorded in the ECB’s Governing Council decisions:
| Date | Step, according to the ECB |
|---|---|
| 30 July 2026 | Accessibility features of the digital euro app announced; usability and accessibility testing to start in 2027 as part of the pilot |
| 15 September 2026 | Call opened for euro area e-commerce and mobile-commerce merchants to take part in the pilot; deadline 27 October 2026 |
| 28 September 2026 | Call opened for private companies to explore how digital euro infrastructure could support their innovation work; deadline 9 November 2026 |
The merchant deadline is today, which means the ECB’s list of interested shops is about to be fixed for that call. The ECB’s project page shows a pilot planned for 2027 and a target of 2029 for a potential first issuance.
Why is the law the missing piece?
The pilot is a test of technology and procedures, not a launch. The ECB’s progress page says that if EU lawmakers adopt the regulation in the course of 2026, the digital euro could be issued during 2029. It also states that the regulation has not been adopted and that the decision on whether to issue a digital euro will only be considered at a later stage, once the EU legislative process has been completed.
So there are two separate decisions. Lawmakers must first agree the regulation that defines the digital euro and its limits. Only afterward would the ECB decide whether to issue it. The 2029 date is conditional: it assumes the law is adopted this year, and it is described by the ECB as something that “could” happen. Readers should treat any firmer claim, including claims of a certain launch year, with caution.
How would a holding limit work?
One of the most discussed design features is a cap on how much digital euro each person could hold. The ECB’s frequently asked questions say users could hold only a limited amount, which would help protect bank deposits in a crisis. The ECB says it tested hypothetical limits of up to €3,000 per person. That is a testing assumption, not a decided figure, and the ECB material reviewed does not set a final limit.
The reasoning is about financial stability. If people could move unlimited savings out of commercial banks into a central bank product, a bank run could happen faster and on a larger scale, because the central bank is seen as the safest place to hold money. A cap, combined with a link to a bank account, is meant to limit outflows of bank deposits. The ECB also says holdings would earn no interest, like cash in a wallet, which further reduces the incentive to treat the digital euro as a savings product.
A worked example of the limit
The arithmetic below is illustrative and uses the €3,000 figure the ECB has tested, not an adopted limit.
- A person holds €3,000 in digital euro and wants to buy a €4,000 item.
- The ECB says linking the digital euro account to a bank account lets users make payments above the limit.
- In that setup, €3,000 would come from the digital euro balance and the remaining €1,000 (€4,000 minus €3,000) from the linked bank account.
The mechanics of how the funds would be pulled, and how fast, depend on rules that are still being finalized in the rulebook and the legislation.
What does the ECB say about privacy?
Privacy is the point on which public debate is sharpest, and the ECB’s claims should be read as design intentions rather than guarantees written into law. According to the ECB, offline payments would offer a cash-like level of privacy, with only the payer and payee knowing the transaction details. For online payments, the ECB says the Eurosystem could not identify users from the payment data it receives, while payment service providers would verify identity for anti-money laundering compliance.
That distinction matters. Banks and payment providers already know their customers and monitor transactions under existing anti-money laundering rules. The ECB’s position is that the central bank itself would not see who is paying whom. Whether that arrangement satisfies critics depends on what the final regulation says about data access, which is one of the unresolved points in the legislative process.
How would offline payments work?
The ECB says the offline function is meant to let people pay with poor or no network connection. Users would first fund an offline balance, then pay by tapping phones or a terminal. Because details would be known only to the two parties, this is the closest the design comes to handing over cash. The ECB’s description is brief, and technical specifics such as offline limits and how a lost device would be handled are not set out on the pages reviewed.
Would the digital euro be programmable money?
The ECB’s answer is no. Its FAQ says the digital euro would never be programmable money, meaning money that can only be spent on certain things or by a certain date. It could, however, support conditional payments, for example releasing payment only once a delivery is confirmed. The line between the two is a frequent source of confusion: a conditional payment is something both parties agree to for a particular transaction, while programmable money would restrict the money itself.
What will it cost, and who earns from it?
The ECB says basic use would be free for individuals. Banks and other providers could offer paid value-added services, such as conditional payments. The Eurosystem itself would not charge or benefit from transaction fees. The cost to merchants and banks, and the level of any fee caps, are matters for the legislation and the rulebook, and no verified figure is given here.
How does it relate to tokenized assets and instant payments?
The digital euro is aimed at everyday payments by the public, which is a different job from wholesale settlement. In its recent decisions the ECB records that the Governing Council approved an agreement for the initial launch of Pontes, a service that settles wholesale transactions in tokenized assets in central bank money, with a launch date of 21 September 2026. Our explainer on tokenized assets covers that side of the market.
On the consumer side, a digital euro would sit alongside existing rails rather than replace them. Euro area customers already have instant bank transfers, described in our piece on how instant payments work, and bank data-sharing services covered in our guide to open banking. A digital euro would add a public-money option to that mix, not remove the others.
What remains unknown?
Several points are unsettled as of 27 October 2026, according to the ECB’s published material:
- Final legislation. The regulation has not been adopted, so every feature described above could change.
- The holding limit. The ECB has tested hypothetical limits of up to €3,000 per person, but a final level and who sets it have not been confirmed in the sources reviewed.
- The decision to issue. The ECB says this will be considered only after the legislative process ends.
- Adoption. Whether shops, banks and consumers will use a digital euro, once available, cannot be known from a pilot alone.
What to watch next
The near-term markers are concrete: the closing of the merchant call today and the innovation call on 9 November 2026, the progress of the EU regulation, and the start of the pilot and its usability and accessibility testing in 2027. A digital euro is best understood as a public infrastructure project with a long runway. The design choices on limits, privacy and fees are being made now, and they will shape what, if anything, reaches the public at the end of the decade.
This article is general information, not financial, investment, tax or legal advice.
Sources: European Central Bank
