Digital Euro Advances with Third Progress Report in 2025

Digital Euro Preparation Phase Shows Significant Progress

The European Central Bank (ECB) has published its third progress report on the digital euro preparation phase, revealing substantial advancements in developing Europe's central bank digital currency (CBDC). The current preparation phase, which began on November 1, 2023, is scheduled to conclude in October 2025, with the ECB making significant strides in technical development, user testing, and regulatory framework establishment.

Rulebook Development and Market Testing

The ECB has made remarkable progress on the draft digital euro scheme rulebook, with extensive feedback from the Rulebook Development Group and approximately 50 market participants helping refine sections on risk management and dispute management. 'We are on track to deliver on EU leaders' request to accelerate digital euro progress,' stated ECB Executive Board member Piero Cipollone in a recent interview. Approximately 70 market participants are currently testing features like conditional payments through a newly launched innovation platform that attracted over 100 applications.

Focus on Inclusivity and User Experience

The ECB has intensified user research through focus groups with small merchants, vulnerable consumers, and underrepresented groups to ensure inclusive design. 'The digital euro will offer the highest privacy standards, including offline functionality comparable to cash, where only payer and recipient know about transactions,' Cipollone emphasized. The findings from this extensive user research will be published in Q3 2025, providing crucial insights for final design decisions.

Technical Infrastructure and Privacy Protections

Technical discussions with mobile device manufacturers are advancing offline digital euro solutions, while the ECB develops methodology for holding limits to maintain financial stability. The digital euro aims to function as a digital equivalent to cash, preserving people's freedom to pay with public money in online transactions where physical cash cannot be used. For online transactions, the ECB will only see transaction codes without identifying participants, addressing privacy concerns raised by lawmakers and citizens alike.

Legislative Timeline and Future Outlook

The European Parliament is advancing legislation for the digital euro, with the proposal currently led by rapporteur Fernando Navarrete Rojas in the ECON committee. The ECB expects legislation to be finalized by mid-2026, with a full rollout projected by 2029 if no delays occur. 'The digital euro is a must to address the fundamental problem of lacking a European digital payment solution,' Cipollone stated, highlighting strong political support from European leaders who view the project as key to a competitive European payment system.

The project explores innovative features like conditional payments, where users could pay for services only if delivered as promised. Despite social media rumors, no specific blockchain technology has been confirmed for the implementation. The preparation phase continues with the next progress report due later this year, potentially leading to a competitive payment system by 2028 that would strengthen Europe's strategic autonomy in the digital payments landscape.

Sources: ECB Progress Report, Cipollone Interview, European Parliament