ECB official: Digital Euro could come out by 2026

The European Union could issue a digital euro within four years, a senior official from the European Central Bank (ECB) said. Peer-to-peer payments could be a first test case, though no final decision has been made yet.

“At the end of 2023 we could decide to start a realization phase to develop and test the appropriate technical solutions and business arrangements necessary to provide a digital euro,” said Fabio Panetta, a member of the European Central Bank’s executive board, according to Reuters. “This phase could take three years.”

The timeline for the central bank digital currency (CBDC) has been pushed back and forward because of concerns over Russia’s war in Ukraine and the rise of private stablecoins like Facebook’s now-abandoned Libra.

Peer-to-peer (P2P) payments, allowing transactions among friends, could be the first testing ground for the new technology before it spreads to other areas like payments in stores or online, Panetta suggested.

“A P2P payment solution that covers a broad set of users across the entire euro area could provide fertile ground for the adoption of a digital euro,” Panetta said at an event at the National College of Ireland, citing research that showed the application would have the widest use early on.

Back in October, the ECB started a two-year investigation phase to look at issues like what use cases to prioritize, although the ECB hasn’t decided yet on whether to issue a digital euro in the first place. Panetta has previously said that a realization phase due to start late next year could last three years.

In March, ECB President Christine Lagarde said the sanctions following the war in Ukraine offered a reason to speed up the plans, but other EU officials suggested they were slowing down the process.

“There was some time back a sense of more urgency, because of the concerns of what might happen from private providers,” Mairead McGuinness, the EU’s financial-services commissioner, said at the same event. “Nobody is rushing … we need to move swiftly but not hastily.”

The idea of the EU issuing its own CBDC first emerged after an industry consortium led by Facebook proposed its own cryptocurrency, Libra, subsequently renamed Diem before being abandoned.

But recent collapses in the private crypto market may add yet one more reason to pursue the project, Panetta said.

Stablecoins don’t have the regulatory safety net offered to banks and “are therefore vulnerable to runs,” he said, citing the crash last week of TerraUSD (UST), which is supported by the nonprofit Luna Foundation Guard.