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The European Central Bank is on track to become the first major Western central bank to issue a retail central bank digital currency (CBDC), with the launch of a digital euro targeted for 2029 as policymakers seek to strengthen Europe’s payment infrastructure and reduce reliance on foreign payment providers and privately issued digital assets.

The European Parliament, the European Commission and the Council of the European Union are expected to conclude negotiations on the legislative framework for the digital euro by the end of the year. Subject to the adoption of the legislation, the ECB is expected to formally approve the project on Jan. 1, 2027, marking 25 years since euro banknotes and coins entered circulation.

The digital euro is scheduled to be introduced following a pilot phase due to begin in the second half of 2027. The trial will involve 36 banks and payment service providers from 19 countries, including Greece’s Piraeus Bank, National Bank of Greece, Bank of Chania, Bank of Cyprus and fintech company Revolut.

The Bank of Greece is represented on the ECB’s high-level digital euro task force by Sissy Papagiannidi, director of Payment and Settlement Systems.

ECB officials have argued that the rapid growth of U.S. dollar-denominated stablecoins and recent U.S. legislation governing the sector have reinforced the need for a digital euro to safeguard Europe’s monetary sovereignty and strategic autonomy.

The central bank says the initiative is intended to ensure that central bank money remains the foundation of the euro area’s payment system as transactions become increasingly digital and token-based.

The digital euro forms part of a broader ECB strategy to modernize Europe’s payment infrastructure, covering retail and wholesale payments, business-to-business transactions and cross-border payments.