The European Central Bank (ECB) announced this Thursday, 30th, that it is preparing the first issuance of the digital euro in 2029, as soon as the necessary legislation for this purpose is adopted.
The ECB, which meets this Thursday in the Italian city of Florence to decide on interest rates, stated that “the Governing Council’s final decision on whether or not a digital euro will be issued, and on what date, will be taken after the legislation has been adopted”.
If European lawmakers adopt the regulation on the introduction of the digital euro in 2026, the ECB could carry out a pilot exercise and initial operations from mid-2027.
The ECB and national central banks must be prepared “for a possible first issuance of the digital euro in 2029”, adds the monetary institution.
The ECB considers that “the need for a public digital payment method as a complement to cash is increasingly urgent” as the number of cash payments decreases.
It is estimated that total development costs, including components produced both externally and internally, will amount to 1,300 million euros by the first issuance in 2029.
The ECB predicts that, from 2029, annual operating costs will be approximately 320 million euros.
The ECB and national central banks would assume these costs, as they already do with those of producing and issuing euro banknotes which, like the digital euro, are a public good.
As with banknotes, the ECB expects these costs to be offset by the gains generated, even if holdings of digital euros were small compared to banknotes in circulation.
The member of the ECB’s executive committee and chairman of the high-level working group on a digital euro, Piero Cipollone, estimated at the beginning of October the cost of investment that eurozone banks will have to make to introduce the digital euro at between 4,000 and 5,800 million euros, which represents between 1,000 and 1,440 million euros annually for four years.
Therefore, the costs of the digital euro for banks will be contained, close to the initial estimates of the European Commission (EC) and similar to those of the Payment Services Directive.
The annual costs (over four years) correspond to approximately 3.4% of the annual IT upgrade budgets of the largest banks in the eurozone, those that the ECB directly supervises.
Deposits of up to 3,000 digital euros would not pose a risk to eurozone banks, nor a risk to financial stability.
The digital euro will complement physical cash and offer advantages such as simplicity, privacy, reliability and availability across the eurozone.
The ECB also supports the EC’s proposal to strengthen the right to pay with cash.
“The euro, our common currency, is a symbol of confidence in European unity,” declared ECB President Christine Lagarde.
“We are working to make the most tangible form – money in euros – adapt to the future, redesigning and modernizing our banknotes and preparing for the issuance of digital money,” added Lagarde.
“This is not just a technical project, but a collective effort to guarantee the future of Europe’s monetary system,” said Cipollone.
A digital euro will allow citizens to enjoy the benefits of physical money also in the digital era.
“This will reinforce the resilience of Europe’s payments landscape, reduce costs for merchants and create a platform for private companies to innovate, grow and compete,” according to Cipollone.
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