Digital euro

Recognising the need to reconsider the way in which central banks deliver core functions and core objectives in light of an evolving digital economy, a number of central banks are considering the potential issuance of a Central Bank Digital Currency (CBDC).

In a European context, the European Central Bank (ECB) is working with the national central banks of the euro area (including Central Bank of Ireland) to investigate the potential issuance of a retail CBDC – a digital euro.

What is a digital euro?

A digital euro would be a central bank digital euro (similar to physical euro banknotes and coins), except offered in digital form. It would act as an electronic equivalent to cash and it would complement banknotes and coins, not replace them. A digital euro would be a fast, secure and easy to use payment-instrument, which would be available for use by European citizens and businesses for everyday payments, across the euro area. A digital euro would ensure that citizens of the euro area would continue to have access to widely accepted, safe and trusted means of payment for the digital age.

What would a digital euro mean for me? 

A digital euro would give you greater choice for how you pay complementing cash and other payment services. It will be available for all typical day-to-day payments, for instance to transfer money (“person-to-person”), to pay in shops and restaurants, to pay online, or to make payments to public authorities.

If a decision to issue a digital euro is taken in the future, it would be the largest project undertaken by the Eurosystem since the launch of the single currency and could potentially have very significant implications for citizens, businesses and the financial system. Consequently, before any decision can be made to introduce a digital euro, all foreseeable benefits and potential drawbacks will be carefully considered by the Eurosystem, the European Commission and the central banks and governments of euro area countries.

Why is the Eurosystem investigating this?

Around the world, central banks are considering whether and how they might issue CBDCs for a number of reasons, including:

• Tackling the declining use of cash
• Providing a catalyst for digitalisation of economies
• Increasing financial inclusion and
• Promoting competition in payments services.

For the Eurosystem, the issuance of a digital euro could support the wider policy objectives of the European Union including the digitalisation of the European economy and fostering the international role of the euro. A digital euro could also help to tackle specific monetary concerns by responding to the declining use of cash as a means of payment and ensuring the normal provision of payment services.

ECB Digital Euro Project

In October 2021, the Eurosystem launched a two-year investigation phase to explore possible technical and policy options that could form the basis of a digital euro design. This investigation considered how digital euro could be distributed and used by citizens and businesses and the potential impact it may have on the European economy and society. The Eurosystem have published the following report providing a summary of the investigation phase and the outlook for the next phase of the project: A stocktake on the digital euro (PDF 486.19KB)

On 18 October 2023, the Governing Council of the European Central Bank (ECB) decided to move to the next phase of the digital euro project: the preparation phase, following the completion of the investigation phase.

The preparation phase commenced on 1 November 2023 and will initially last two years. Some of the key deliverables of the phase will include:

• Finalising the digital euro scheme rulebook
• Selecting providers that could develop a digital euro platform and infrastructure
• Testing and experimentation 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 and
• Further engagement with the public and all stakeholders.

Throughout the preparation phase the ECB will publish periodic progress reports outlining progress made within the phase:  

• First progress report on the preparation phase of the digital euro (PDF 387.41KB)
• Second progress report on the preparation phase of the digital euro (PDF 311.44KB)

In October 2025, the Governing Council of the ECB will decide whether to move to the next stage of preparations, to pave the way for the possible future issuance and rollout of a digital euro.

The launch of the preparation phase is not a decision on whether to issue a digital euro. That decision will only be considered by the Governing Council once the European Union’s legislative process has been completed. The ECB will take into account any adjustments to the design of the digital euro that may become necessary as a result of the legislative deliberations.

Source: ECB First progress report on the preparation phase of the digital euro (PDF 387.41KB) 

What is the European Commission’s digital euro legislative proposal?

On 28 June 2023, the European Commission published its legislative proposal for the establishment of a legal framework to for a possible digital euro.

The legislative proposal currently proposes legal tender status for a potential digital euro offering ensuring it would be widely accepted as a means of payment across Euro area. It also supports that digital euro services should be free of charge for individuals, reflecting its status as a public good and keeping in line with individuals’ experience with cash.  

For further information on the legislative proposal please refer to the European Commission’s Digital Euro Package.

How can I find out more?

The ECB and Eurosystem national central banks will continue to provide updates on the digital euro project as the work progresses.

If you require any further information please contact the Central Bank of Ireland’s Digital Euro Project Team at [email protected].

See also:

• ECB report on a digital euro (PDF 418.58KB)
• ECB digital euro website
• The ECB Podcast: The digital euro, demystified
• ECB digital euro brochure (PDF 3.22MB)
• ECB digital euro one page overview (PDF 1.63MB)
• BPFI and Bearing Point Roundtable – Practical Considerations of a Digital Euro – Keynote address by Gillian Phelan (Central Bank of Ireland) (PDF 218.06KB)