The European Central Bank plans to enable settlements using distributed ledger technology directly in central bank money next year. Executive board member Piero Cipollone confirmed the preparation during remarks on Europe’s monetary transformation. The ECB is also advancing technical readiness for the digital euro. In parallel, it is exploring ways to connect its systems with international payment infrastructures to support cross-border transactions.
Cipollone said the euro area needs the central bank to lead monetary change. A single currency and policy require that one euro always hold equal value across all forms. He pointed to the Eurosystem’s role in preserving monetary unity. Over twenty-five years, the euro has expanded to twenty countries and soon twenty-one.
The Eurosystem also operates key infrastructures. These include T2 for large payments, T2S for securities, TIPS for instant payments, and ECMS for collateral movements.
The ECB expects the digital euro infrastructure to serve more than domestic payments. Cipollone said the system could eventually support settlements involving other central bank digital currencies. Such links could help create a more integrated global payment environment. Financial institutions would settle transactions in central bank money rather than private instruments.
At the same time, the ECB aims to limit disruption to banks. It plans holding caps on digital euro balances and will not pay interest. These measures seek to preserve banks’ role in lending. They also protect the transmission of monetary policy across the euro area.
Cipollone said reliance on foreign private payment solutions carries risks. Europe could import standards and dependencies that lead to fragmentation and instability. Instead, he said joint action allows Europe to build an integrated digital financial system. The euro would remain at the core while respecting partner sovereignty.
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EU lawmakers must approve the legal framework in 2026. If approval follows, pilot transactions using the digital euro could begin in 2027. Full issuance readiness is targeted for 2029. ECB President Christine Lagarde has said technical preparation is largely complete.
She also said legislators will decide final design choices. These include privacy safeguards that remain among the most debated issues. The ECB has said the digital euro should not restrict spending choices. It rejects programmability that limits use while allowing conditional payments.
For offline payments, the ECB proposes privacy similar to cash. Digital euros would be stored locally on devices and support peer-to-peer transfers without real-time central validation. This model would limit third-party visibility of every transaction. The ECB has discussed secure smartphone elements or dedicated smart cards for offline use.
Yet these plans exist alongside stricter EU surveillance rules. Lawmakers have backed broader data retention measures and tighter crypto privacy limits.
New anti-money laundering rules will restrict anonymizing crypto accounts from 2027. Against this backdrop, the digital euro debate continues to focus on trust, privacy, and monetary unity.
The ECB plans to introduce DLT-based settlements in central bank money while advancing the digital euro toward potential issuance by 2029. Lawmakers will shape the legal framework, privacy rules, and usage limits. The project aims to support cross-border payments while preserving monetary unity and the banking system’s role.