ECB Ready for Digital Euro, Awaits EU Legislative Approval

European Central Bank President Christine Lagarde made the institution’s position clear in a recent statement: “We have done our work, we have carried the water, but it’s now for the European Council and certainly later on for the European Parliament to identify whether the Commission proposal is satisfactory.” This marks a pivotal transition for the digital euro project, moving from a phase of technical preparation to one of political deliberation and legislative action. The ECB has confirmed that a review of the project is underway with the direct participation of these EU bodies.

The proposed digital euro is conceived as a public, widely usable digital currency with full legal tender status. According to the official proposal, its core purpose is to “ensure that central bank money with the status of legal tender remains available to the general public, while offering a state-of-the-art and cost-efficient payment means.” Unlike private stablecoins, a retail CBDC represents a direct claim on the central bank, backed by the state, providing what Lagarde termed “the anchor of stability for the financial system” in the digital age.

The push for a European CBDC has gained significant urgency from developments across the Atlantic. ECB executive board member Piero Cipollone highlighted this in January, stressing the need for a digital euro in direct response to the Trump administration’s then-developing plans for a stablecoin policy aimed at strengthening the U.S. dollar. According to the analysis, shifts in U.S. crypto policy and a more permissive stance toward stablecoins have sharpened European discussions about monetary autonomy, with Cipollone noting that lawmakers are “becoming more alert” to the conversation.

This urgency is compounded by the actions of former U.S. President Donald Trump, who has taken a consistently hostile stance toward CBDCs. In early 2024, Trump stated he would “never allow” a U.S. CBDC, believing it would grant the government excessive control. He followed through by signing an executive order in January prohibiting federal agencies from establishing or promoting CBDCs, effectively halting U.S. development. This transatlantic policy divergence has created a strategic vacuum that the ECB is keen to fill with its own sovereign digital currency.

The fundamental concern, as European central bankers warned as early as 2021, is that failing to issue a public digital currency could cede monetary control to private or foreign payment systems as physical cash usage declines. The International Monetary Fund (IMF) recently echoed this warning, stating that private digital money, including stablecoins, could weaken domestic monetary policy and financial stability—a risk the digital euro is explicitly designed to mitigate.

The digital euro’s design principles prioritize financial stability, monetary sovereignty, privacy, and inclusion. The proposal explicitly promises a “high level of privacy in digital payments,” a critical feature distinguishing it from many private sector alternatives. Policymakers have also examined how the currency might interact with existing technological infrastructure. An ECB spokesperson previously told Decrypt that “the proposed regulation on the digital euro is technology neutral,” leaving open the possibility for compatibility with public blockchains such as Ethereum and Solana.

With the technical foundation laid, debate within European institutions has now moved from principle to execution, with calls for clearer timelines around pilot programs and a potential launch toward the end of this decade. The project represents a strategic effort to modernize Europe’s payments infrastructure on its own terms. As the ECB awaits the legislative verdict, the digital euro stands at the intersection of financial innovation, geopolitical strategy, and the enduring mandate of central banks to provide secure public money in an increasingly digital economy.