Digital euro could launch by 2029; ECB warns on stablecoins

The European Central Bank warned that growing use of stablecoins could shrink commercial banks’ retail deposit base and has selected 36 banks, fintechs and payment firms for a 12-month digital euro pilot due to start in the second half of 2027. The ECB says issuance could be possible in 2029.

Piero Cipollone, a member of the ECB’s executive board, made the remarks at a meeting of the Federation of Italian Cooperative Credit Banks. He warned that wider stablecoin adoption risks reducing deposits while mobile payment providers take fees and collect customer data.

The chosen providers will take part in a yearlong exercise to test how a central bank digital currency might operate alongside existing payment systems and banking services. The pilot will assess technical arrangements, distribution models and the effects on customer deposits and data flows.

The pilot is scheduled to run for 12 months starting in H2 2027. The ECB has not made a final decision on issuing the digital euro and says any move toward issuance will depend on pilot results and broader policy work, with 2029 given as the earliest possible issuance date.

ECB officials have flagged Europe’s reliance on non-European card networks and payment platforms and say the project will include monitoring of interactions between a public digital currency, private stablecoins and current digital payment services.

Cipollone argued: “The digital euro would both preserve the role of public money and ensure banks remain involved in the payments ecosystem while continuing to meet their customers’ needs.”

Backers of the project describe potential improvements to payments resilience and reduced foreign participation in the payments market. Other officials say the practical test will be whether the digital euro reduces costs and improves convenience for consumers and businesses.