The European Central Bank is stepping up its efforts to build a blockchain-based payments system, a move which could pave the way for a digital euro. Announced on Thursday, the initiative will unfold in two phases. The first phase will involve developing a platform for settling transactions in central bank money through a link with the TARGET system, which already facilitates payments across the eurozone.
The ECB plans to explore a more integrated, long-term blockchain solution for processing central bank money transactions in the second phase. Executive Board member Piero Cipollone described the project as a step towards improving European financial markets through innovation. The ECB believes this approach could strengthen Europe’s monetary system while reducing dependence on non-European payment providers.
The push for a digital euro aligns with the ECB’s broader goal of unifying Europe’s capital markets. Since 2021, the bank has been studying how to design and distribute a central bank digital currency (CBDC). As it refines its blockchain-based system, the ECB will consult with public and private stakeholders to ensure it meets the needs of European citizens. The full timeline for implementation will be announced at a later stage.
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Three Dutch firms have joined forces to launch EURQ, a blockchain-based digital euro designed to merge decentralised technology with traditional financial systems. The collaboration, involving Quantoz Payments, NPEX, and Dusk, marks the first time a licensed stock exchange will integrate electronic money tokens into its operations. The initiative, fully compliant with European regulations, aims to provide businesses and individuals with a secure, regulated digital euro.
EURQ is built to meet the Markets in Crypto-Assets Regulation (MiCA) requirements, allowing the seamless trading of real-world assets on-chain via the Dusk and NPEX networks. Quantoz Payments will establish a regulatory-compliant framework, enabling faster and more efficient cross-border transactions. The initiative is expected to set a new standard in financial innovation, demonstrating how blockchain can enhance existing monetary systems.
The project’s leaders stress that EURQ is more than just a stablecoin—it is a true digital representation of the euro, fully approved by regulators. They see it as a significant step towards integrating digital assets into mainstream finance, promoting greater transparency and trust within the financial sector. This development highlights the evolving role of blockchain in regulated markets, paving the way for further advancements in digital finance.
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Germany’s central bank chief, Joachim Nagel, has reinforced his scepticism towards Bitcoin, dismissing it as unsuitable for central bank reserves. Speaking at an event hosted by the London School of Economics, Nagel argued that Bitcoin is not a genuine currency but rather an asset class lacking liquidity and security. He also criticised the pro-crypto stance of former US President Donald Trump, particularly proposals to establish a strategic Bitcoin reserve. Comparing Bitcoin to the Dutch Tulip Mania of the 17th century, he warned of its speculative nature and volatility.
In contrast, Nagel is a strong advocate for the digital euro, highlighting its potential to strengthen Europe’s financial sovereignty. He cautioned that reliance on private sector payment solutions, particularly from US firms, could expose Europe to geopolitical risks. While the long-term effects of central bank digital currencies (CBDCs) on interest rates remain uncertain, he emphasised their importance in ensuring a resilient financial system.
Meanwhile, the US is shifting its regulatory approach to cryptocurrency. Under Acting SEC Chair Mark Uyeda, new policies have allowed banks to re-enter the crypto custody sector. The SEC recently replaced its restrictive guidance, paving the way for regulated financial institutions to hold digital assets. As these developments unfold, Bitcoin is currently trading at $96,318, marking a slight decline over the past week.
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The European Central Bank (ECB) is keen to accelerate the creation of the digital euro, particularly following US President Donald Trump’s endorsement of stablecoins linked to the US dollar. ECB board member Piero Cipollone highlighted that Trump’s backing could push European lawmakers to fast-track the legislation for the digital euro. The ECB envisions the digital euro as a central bank-backed online wallet, offering an alternative to major US payment providers like Visa and PayPal.
Despite the European Commission’s proposal for digital euro legislation in June 2023, progress has been slow due to some scepticism in the political and banking sectors. Cipollone remains optimistic that recent developments, including the rise of US stablecoins, will prompt greater urgency from EU lawmakers. He expressed hope that the digital euro legislation could be finalised by summer, allowing for negotiations with the Commission to be wrapped up before November.
Cipollone also raised concerns over the growing use of US stablecoins in Europe, warning that it could lead to a shift of deposits from European banks to the US. He acknowledged bankers’ fears that a digital euro could have a similar effect. Still, he reassured that the ECB would likely limit the amount of digital euros users can hold to prevent destabilisation. Several countries, including Nigeria and China, have already launched central bank digital currencies, while many others, such as Russia and Brazil, are in the testing phase.
Eurozone banks should embrace a digital euro to counter United States President Donald Trump’s new push to promote dollar-backed stablecoins globally, European Central Bank (ECB) board member Piero Cipollone stated on Friday. Cipollone warned that stablecoins, which function similarly to money market funds, could further erode banks’ revenues and customer base, strengthening the need for an ECB-backed digital currency.
A digital euro would provide a secure, centralised online wallet guaranteed by the ECB but managed by private banks, allowing even unbanked individuals to make payments. However, eurozone banks have raised concerns about losing deposits to this digital alternative. Cipollone emphasised that such a move would safeguard Europe’s financial system from potential disruptions caused by stablecoins gaining global traction.
While the ECB continues to experiment with a digital euro, a final decision depends on European lawmakers approving the necessary legislation. Meanwhile, Trump’s executive order on Thursday prohibited the Federal Reserve from issuing its own digital currency. Over 40 countries, including China and Russia, are already piloting central bank digital currencies, putting pressure on the eurozone to accelerate its digital efforts.
The European Central Bank (ECB) has released its second progress report on the development of the digital euro, marking the halfway point of the preparatory phase. The report addresses key issues such as holding limits for the central bank digital currency (CBDC) and the harmonisation of laws to ensure universal standards. The Rulebook Development Group is leading efforts with seven workstreams involving market participants and central banks.
User preferences on holding limits are being studied, with a potential solution being a ‘reverse waterfall’ system that transfers excess digital euros to fiat in linked accounts. Offline transaction solutions are also under consideration, although specific details remain limited. Meanwhile, discussions continue over competition between European and non-European financial service providers, as well as the development of technical services such as wallets.
The ECB aims to improve user experience, offering cash-like privacy for those prioritising discretion. ECB executive board member Piero Cipollone previously assured that the digital euro would provide greater privacy than current commercial options. A final decision on the digital euro’s launch is expected in October 2025, with the next progress report due in mid-2025.
The proposed legislation aims to ensure that a digital euro would have legal tender status, be easily accessible to all individuals, offer basic services for free, protect privacy and data, and prevent money laundering and terrorist financing risks.
The European Central Bank (ECB) welcomes the proposal and supports the protection of the legal tender status of euro cash. “The legislative proposal is key to ensuring that the digital euro brings value to the people, taking the appreciated features of cash into the digital sphere”, said Executive Board member Fabio Panetta
The European Commission announced another round of consultation on the launch of digital euro, the EU’s central bank digital currency (CBDC). Consultations would aim on comments and considerations of payment industry specialists, e-money institutions and consumer associations, among others. The consultation period started on April 4 and will last until 14 June 2022.
The outcomes of the consultations will target evidence on the following issues:
Users expectations for a digital euro
Role in the EU’s retail payments, and impact on digital economy
Availability for retail use while continuing to safeguard the legal tender status of cash
Impact on the financial sector, and the financial stability
Application of anti-money laundering and counter terrorist financing (AML-CFT) rules
The privacy and data protection aspects
International payments with a digital euro
Participants can submit their response in an online questionnaire posted on an EU Commission website.
