The European Central Bank (ECB) announced the launch of its innovation platform for the digital euro central bank digital currency (CBDC). Seventy organizations have signed up to participate, including startups, merchants, fintechs, banks and other payment service providers.
One of the workstreams is for “Pioneers” and will focus on conditional payments, where a payment is only triggered if a condition is met, such as the arrival of a parcel. The other group involves “Visionaries”, who will explore other potential use cases with societal impact, such as financial inclusion. During the call for participants last October, the central bank also mentioned tokenization amongst the Visionary applications.
Only four of the participants are banks, one each from Austria, Cyprus, Germany and Spain, with Spain’s CaixaBank by far the largest. Two other entities, Italy’s ABI Lab and Spain’s Iberpay, have historically worked on DLT and digital euro projects in collaboration with many of their nation’s banks.
Meanwhile, the ECB is providing a simulated digital euro platform for Pioneer participants to integrate with, whereas the Visionary group’s work is less hands on. The Visionaries are participating in workshop presentations to the central bank this month, with the Pioneers due to submit a report to the ECB later in the year, and the ECB will itself publish a report on this work.
Decision on digital euro launch expected in late 2025
With the digital euro’s two year preparation phase ending in October 2025, the ECB is scheduled to deliver a larger report. At the same time, it is expected to announce a decision on whether to launch a digital euro, although that is subject to the passage of legislation.
Prior to last year’s European elections, the passage of enabling legislation seemed extremely likely, but afterward there was less support, with the legislative coordinator, the rapporteur, stepping aside. The ECB has long seen the digital euro as needed to protect monetary sovereignty, given the dominance of foreign providers such as Visa and Mastercard in the payments landscape. Since the United States announced plans to expand dollar stablecoins globally, the ECB has been using this as a lightning rod to garner legislative support, despite the EU’s crypto MiCA regulations that cover stablecoins containing monetary sovereignty protections.
The potential impact on citizens remains a key consideration in the digital euro debate. Proponents highlight convenience, monetary sovereignty, and reduced reliance on private payment networks, while critics raise questions about privacy safeguards, the technical learning curve for some populations, and whether it truly addresses unmet payment needs.
With the ECB seen as favoring a digital euro, the actual decision is likely in the hands of parliamentarians.
