European Central Bank Targets 2029 for Digital Euro Launch

TLDR

• The European Central Bank plans to launch the digital euro in 2029 if lawmakers approve a legal framework in time
• ECB officials will continue preparatory work after the current phase ends this month, with implementation requiring 2.5 to 3 years after legislative approval
• Only three countries have launched CBDCs so far: Nigeria, the Bahamas, and Jamaica, with 49 others in pilot phases
• EU lawmakers remain divided on key design features including user holding limits and privacy protections, causing legislative delays
• ECB simulations show high holding limits could shift up to €700 billion from bank deposits to digital euro wallets

The European Central Bank is moving forward with plans to introduce a digital euro by 2029. The timeline depends on EU lawmakers establishing the necessary legal framework within the next four years.

ECB officials will continue development work after the current preparation phase concludes this month. Sources familiar with the matter told Bloomberg that technical groundwork will proceed despite ongoing legislative uncertainty.

The project began in 2020 when ECB officials started exploring a potential digital currency. The bank entered a formal two-year preparation phase in late 2023.

ECB Executive Board member Piero Cipollone indicated in September that mid-2029 represents a realistic launch target. He stated the bank would need approximately 2.5 to 3 years after lawmakers pass legislation to complete implementation.

Legislative Roadblocks Slow Progress

EU legislators have struggled to reach consensus on critical design elements. Disagreements center on user holding limits and privacy measures that could affect commercial banks.

The ECB conducted simulations showing potential consequences of different holding limits. High limits could trigger a shift of up to €700 billion from traditional bank deposits into digital euro wallets.

Legislation has been under consideration in the European Parliament since 2023. Political concerns and the 2024 elections caused delays in the approval process.

Finance ministers recently agreed on a roadmap for the digital euro. However, member states continue debating costs, banking sector risks, and currency design features.

The European People’s Party presents one of the main obstacles to progress. Some lawmakers in this political party prefer private sector payment solutions over the ECB’s digital currency plan.

Privacy and Security Concerns

The project faces resistance from multiple groups including banks, lawmakers, member states, and potential users. Privacy concerns represent the primary source of skepticism about the digital euro.

Cipollone argued that a digital euro would provide all Europeans with free, universally accepted digital payment options. He emphasized the currency would function during major disruptions like wars or cyberattacks.

Growing concerns about dependence on US payment companies add urgency to the debate. PayPal, Mastercard, and Visa currently dominate European digital payments.

Worries about dollar-backed stablecoins linked to US President Donald Trump potentially gaining popularity in Europe have intensified discussions. ECB President Christine Lagarde and other officials are pushing for faster action to strengthen the central bank’s strategic independence.

Globally, only three jurisdictions have launched CBDCs according to the Atlantic Council’s tracker. Nigeria, the Bahamas, and Jamaica operate active digital currencies while 49 countries remain in pilot phases.

The Human Rights Foundation identifies improved payment efficiency and expanded financial inclusion as potential CBDC benefits. The organization also warns about privacy infringement risks and new avenues for government corruption.

The ECB is focusing increased attention on developing a wholesale central bank digital currency. In July, the bank approved a plan allowing transactions using distributed ledger technology to settle with central bank money.

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