Digital euros must be phased in gradually – starting issuance with a big bang would place considerable burden on all stakeholders

The idea of digital cash may initially sound inherently contradictory or even conceptually impossible. However, with the digital euro it is likely to become tangible reality within the next few years.

The digital euro is a central bank digital currency, an electronic equivalent to cash, that would be issued by the European Central Bank (ECB).

The digital euro would function as a means of payment that complements, but does not replace, euro coins and banknotes. The current plan is to reach agreement on the legislative framework required for the digital euro before the end of 2026. If all the pieces fall into place, it is estimated that the issuance of digital euros could begin in 2029 at the earliest, while pilot testing by selected banks and merchants could begin two years earlier in 2027.

“In the current geopolitical situation, it is easy to understand why the European Union aspires for more independent payment solutions.”

At the moment, it looks very likely that the digital euro will indeed proceed all the way to the issuance stage. The project is under considerable political pressure, driven by the EU’s aspiration to achieve sovereignty in European payments and reduce Europe’s heavy reliance on non-European operators, such as the card schemes Visa and Mastercard. In the current geopolitical situation, the goal of payment sovereignty is easy to understand: the ability to operate independently in an increasingly uncertain world would greatly strengthen and benefit Europe.

The legislative train is already rolling. The European Council adopted a positive negotiating position last December, and the Parliament is anticipated to finalise a similarly positive stance in June. If the Parliament’s ECON committee votes in favour, the digital euro will enter trilogue discussions under Ireland’s leadership in the second half of 2026. This means that by the end of the year, we will probably have at least an idea of the legislative form of the digital euro.

“Starting issuance with a big bang from day one carries significant risks.”

The price tag for such a massive infrastructure project as the digital euro is far from modest. According to a cost study conducted by the consultancy firm PwC and 19 European banks in 2025, the estimated investment costs of euro area retail banks would amount to at least €18 billion.

This figure is only a first approximation of the minimum expected costs, as the scope of the study did not cover the costs of the as-yet unconfirmed offline and multiple account functionalities or the running costs arising from the use of the digital euro beyond the first four years. Implementing an offline functionality would enable payments in digital euros to be made even without an internet connection, and the question of multiple accounts is related to whether individual consumers would be limited to a single digital euro account per person or allowed to have several digital euro accounts with different banks.

Approximately 75% of the change costs would stem from technical adjustments. In addition to its financial impact, the introduction of the digital euro would tie up 46% of banks’ relevantly-skilled human resources per year. Costs, then, are inevitable, but new revenue streams are yet to be established. The ECB should therefore simplify the digital euro project and implement it in phases. Starting with a big bang, with a full-scale rollout from day one of issuance, would carry significant risks.

“Phased implementation would lighten the operational impact, spread investment costs across a longer period and better support risk management.”

The digital euro would be an entirely new payment instrument with its own new infrastructure. Introducing every component, channel and technical feature in a single launch would place considerable burden on all stakeholders. It would require the Eurosystem, banks and merchants to be fully ready at the same time across the entire euro area – which is akin to trying to tune an aircraft engine mid-flight. Phased implementation would lighten the operational impact, spread investment costs across a longer period and better support risk management.

But what about the end users of the digital euro, the ordinary consumers? Their interest in the digital euro can be, and has been, measured, but actual usage and benefits will only become apparent years after issuance. The deposit-based monetary system that banks have created already works effectively and offers customers a diverse range of functional and technologically advanced services.

Moreover, Europe already has cross-border, account-based mobile payment initiatives under way, in which private operators are pursuing the same pan-European payment sovereignty that the digital euro seeks to achieve. In this intense competition for relevance, it remains unclear how the digital euro will fit into the broader landscape and ecosystem. Is the digital euro a genuinely necessary new tool or simply another spanner in an already heavy toolbelt?