ECB Unveils New Progress Report on Digital Euro Development

The European Central Bank (ECB) recently shared an update on the development of its digital euro, marking a key milestone in the ongoing preparation phase.

While there has been notable progress, the report acknowledges several challenges that remain, particularly concerning privacy, holding limits for Central Bank Digital Currencies (CBDCs), and the need for legal harmonization across Europe.

The report outlines advancements since the conclusion of the investigative and design phases, highlighting the ongoing efforts of the Rule Development Group (RDG), which has played a vital role in steering the project. The RDG’s work is focused on shaping the rulebook for the digital euro, which covers essential topics such as user experience standards, risk management, and implementation strategies.

A crucial aspect of this work is ensuring the digital euro will be widely accepted, similar to cash payments, across the eurozone. The final version of the rulebook is expected to be released by July 2025.

Additionally, user research remains a key area of focus, with teams conducting technical experiments and gathering insights into user needs and preferences. The ECB is also working on resolving challenges related to holding limits for the digital euro. One proposed solution involves a “reverse waterfall” mechanism, where excess digital euros would automatically convert into fiat and transfer to linked bank accounts. Furthermore, the team is exploring solutions for offline transactions, though details remain sparse.

The competition for providers of technical services, including digital wallets, is anticipated to intensify as the project progresses. The ECB has begun sourcing potential providers for the Digital Euro Service Platform, with calls for tenders already underway. National central banks within the Eurosystem have also been invited to contribute by offering internal components for the platform’s development.