Digital Euro Gathering Urgent Attention Among EU Finance Officials in Response to Trump's Tech Moves
The European Council, Commission, and Parliament have been working diligently on a new draft for the digital euro, a central bank digital currency (CBDC) targeted at retail users. The aim is to finalize digital euro legislation this year, with the mention of Polish and Danish EU Council presidencies.
In February, the European Central Bank (ECB) announced plans for an interim solution for a wholesale CBDC, with the aim of introducing it as a longer-term solution. This move reflects the growing interest in a wholesale CBDC for institutional usage, which has increased over the past couple of years.
Denis Beau, First Deputy Governor of the Banque de France, has expressed that the Banque de France and other Eurosystem central banks are working actively and resolutely to complete the wCBDC project. Beau emphasized the importance of completing the wCBDC project to maintain monetary and financial sovereignty in the face of recent US support for crypto-assets and stablecoins.
The complexity and potential societal impact of a retail CBDC are significant, making it easier to roll out a wCBDC quicker. In 2024, the European Central Bank, Eurosystem, and 64 institutions participated in trials of three wholesale DLT settlement solutions, including a wCBDC solution from the Banque de France, DL3S.
However, the legislative work was interrupted by the European elections mid-last year. Stefan Berger, the member of parliament coordinating the legal drafting, stepped aside due to reservations about the digital currency.
Despite the setbacks, the EU is still in the proposal and negotiation phases for digital euro-related legislation, with formal adoption and implementation expected potentially in 2026 or shortly thereafter. The EU Commission has published various strategic documents on digital infrastructure and future-proofing digital regulation frameworks, with proposals expected in late 2025 and adoption likely in 2026.
Beau also stated that the aim is to develop a European unified ledger to modernize securities transactions in the medium term. The ongoing digital laws, such as the EU AI Act, have well-defined timelines extending through 2025-2027 but are focused on AI governance rather than digital currency legislation.
In conclusion, the expected finalization for legislation covering both retail and wholesale digital euros is most likely aimed for around 2026 or later, aligned with the general timeline of the EU’s digital regulatory reforms and infrastructure modernization initiatives. The digital euro, if implemented, could significantly reduce retail payment dependence on foreign companies like Visa and Mastercard, as well as provide a more secure and sovereign digital payment system for Europe.
[1] European Commission. (2023). Digital Finance Package. Retrieved from https://ec.europa.eu/info/publications/digital-finance-package_en [2] European Commission. (2023). Proposal for a Regulation on Markets in Crypto-Assets (MiCA). Retrieved from https://ec.europa.eu/info/law/better-regulation/have-yoursay/details/regulation-on-markets-in-crypto-assets-mica [3] European Commission. (2023). Proposal for a Regulation on the European Single Access Point for Financial Markets Infrastructure. Retrieved from https://ec.europa.eu/info/publications/proposal-regulation-european-single-access-point-financial-markets-infrastructure_en
- The European Commission is expected to announce strategic documents on digital infrastructure and future-proofing digital regulation frameworks by late 2025, with adoption likely in 2026, as part of the Digital Finance Package.
- The EU Commission has also proposed a Regulation on Markets in Crypto-Assets (MiCA) to provide legal clarity for crypto-assets, stablecoins, and other digital assets within the retail and institutional landscape.
- Furthermore, the EU Commission has proposed a Regulation on the European Single Access Point for Financial Markets Infrastructure to streamline access to various financial markets, potentially including digital assets like stablecoins and CBDCs.
- As technology advances and the industry evolves, it is crucial for governments to maintain a stable legal framework for the integration of stablecoins, CBDCs, and other digital assets within the broader financial system.
- The ongoing activities, such as the EU AI Act, AI governance, and digital infrastructure modernization, play a vital role in ensuring a stable, secure, and competitive digital finance landscape for retail and institutional participants, including stablecoin providers and CBDCs.
