The European Central Bank has selected 36 firms, including Deutsche Bank and Revolut, for a digital euro pilot starting in late 2027. The project is a strategic move to counter the dominance of dollar-backed stablecoins and assert monetary sovereignty. The 12-month test will involve a beta version of the currency, with a potential public issuance targeted for 2029, contingent on the passage of EU legislation.
Digital euro pilot selection
- ▪The 36 participants were chosen from a pool of more than 50 applicants who responded to a call for interest in March 2026
- ▪ECB Executive Board member Piero Cipollone stated the strong market interest shows the private sector is ready to advance the digital euro project
- ▪Selected firms include traditional banks like Deutsche Bank and UniCredit, and fintech companies such as Revolut, Stripe, Adyen, and Worldline
- ▪Italy has the largest number of selected participants with seven companies, followed by Germany with five
- ▪The European Central Bank (ECB) has selected 36 payment service providers for a 12-month digital euro pilot
Monetary sovereignty vs dollar stablecoins
- ▪The ECB is advancing the digital euro project to counter a perceived threat to Europe's monetary autonomy from private, dollar-backed stablecoins
- ▪Dollar-pegged tokens like Tether (USDT) and USD Coin (USDC) dominate the stablecoin market, while the largest euro-pegged token is over 400 times smaller than USDT
- ▪ECB President Christine Lagarde has argued that a public digital currency should be used instead of private euro stablecoin proposals
Pilot testing framework
- ▪The beta currency used in the pilot will be technically similar to the final product but will not have legal tender status
- ▪Testing will involve the ECB, 19 euro-area national central banks, their staff as consumers, and selected merchants
- ▪The pilot will test a beta version of the digital euro in online, offline, in-store, and e-commerce payment scenarios
- ▪The 12-month pilot program is scheduled to begin in the second half of 2027
Legislative timeline for approval
- ▪The European Parliament advanced the project by approving final negotiations on the law in a 416-169 vote on July 9, 2026
- ▪A final decision on whether to issue the digital euro will be made by the ECB Governing Council only after the relevant EU legislation is passed
- ▪The ECB aims to be ready for a potential first issuance of the digital euro in 2029, pending legislative approval
Political opposition to project
- ▪The 169 votes against the digital euro legislation in the European Parliament suggest political opposition exists within the EU
- ▪In contrast to the EU's approach, a U.S. law has barred the Federal Reserve from issuing a digital dollar through December 31, 2030
- ▪Privacy advocates have raised concerns that central bank digital currencies could allow for transaction monitoring and give central banks power to block access to funds
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