ECB Aims for 2029 Digital Euro Launch Amid Political Delays and Strategic Concerns

The European Central Bank (ECB) is pushing forward with its digital euro project, targeting a potential launch in 2029, provided a legal framework is established. This follows the conclusion of the current preparatory phase this month, with officials reviewing progress at a meeting in Florence, Italy. The ECB began formal preparations in 2023 after a two-year investigation phase, and Executive Board member Piero Cipollone has indicated that implementation would take approximately 2.5 to 3 years after legislative approval.

However, significant hurdles remain, as EU legislators have yet to agree on key design features, including user holding limits and privacy measures. ECB simulations reveal that high holding limits could trigger a shift of up to €700 billion from bank deposits to digital wallets, raising concerns about impacts on commercial banks. Finance ministers have agreed on a roadmap, but disagreements among member states over costs, banking-sector risks, and design elements continue to slow progress.

Political deadlock is a major obstacle, with the European People's Party favoring private-sector solutions over the ECB's plan. This has intensified pressure to address reliance on US payment providers like PayPal, Mastercard, and Visa, as well as fears that dollar-backed stablecoins linked to US political figures could gain popularity in Europe. ECB President Christine Lagarde and other officials are urging swift action to enhance strategic independence, with communications expected from the Florence meeting.

In parallel, the ECB is advancing a wholesale central-bank digital currency, approving measures in July to allow distributed ledger technology (DLT) transactions settled with central bank money. For the cryptocurrency sector, the digital euro represents a direct institutional challenge, potentially marginalizing decentralized financial models and creating regulatory uncertainty until uniform rules are adopted.