ECB pushes ahead with digital euro amid stalled legislation

European Central Bank (ECB) President Christine Lagarde has hinted again at the Bank’s preference for launching its long-planned central bank digital currency (CBDC), the digital euro, to sit alongside cash.

In a June 30 speech at the opening reception of the ECB Forum on Central Banking 2025, Lagarde spoke of uncertainty dominating the current narrative and the impact on inflation of uncontrollable events, such as tariffs and supply disruptions.

In her speech, the ECB president said the Bank’s strategy assessment has been an exercise in “evolution, not revolution” and that “even as the world changes around us, we know our purpose. And we will do whatever is necessary to deliver on it – ensuring price stability for the people of Europe.”

While she didn’t specifically mention the digital euro, the language was reminiscent of how Lagarde has previously spoken of the ECB’s mooted CBDC.

Earlier in June, in an interview with Xinhua News Agency, Lagarde again spoke of uncertainty—her favorite catchphrase of the moment—but also gave the strongest indication that the ECB is hoping to get the necessary support from the European Parliament for the digital euro.

When asked about the ECB’s exploration of a digital euro and whether it could cooperate in the future with the People’s Bank of China (PBOC)—which launched its own CBDC, the digital yuan, in 2022—Lagarde said: “Both the PBOC [People’s Bank of China] and the ECB are working on a digital currency. China was ahead; it started earlier. We started six years ago, and we are getting to the point where, if the legislature supports the proposal, we should be ready to launch.”

She added that the ECB wants “to make sure that we have a European offer that is available, so that within the entire euro area there is a means of payment and a solid currency that can help you transact both online, peer-to-peer, business-to-business, and that’s the purpose of the digital euro.”

Lagarde also explained the reasons behind the ECB’s decision to plough ahead with the preparations for a CBDC: “Because of client demand, to put it very simply. Because many Europeans – not all, but many – like to pay electronically, digitally, without cash.”

However, Lagarde did qualify this by stating that “many Europeans still like cash. I like cash. So we will continue to have cash… but we need, as a sovereign expression on the financial stage, to be able to respond to the demand of our customers, Europeans.”

She added that “if they want cash, we should be able to print secure banknotes. If they want digital cash, we should be able to offer a digital euro.”

In other words, there is a public demand for a digital euro. The ECB has been developing it for many years, and it is now ready to go. In Lagarde’s opinion, it is in the interests of all to launch it. The only missing ingredient is the legislative framework, which the European Parliament must establish.

Awaiting legislation

On February 9, 2024, a draft report on the package and the ECB’s digital euro investigation phase was tabled, but as yet no vote on this draft report has taken place. Therefore, the ECB remains without the necessary legislative framework to launch the digital euro, no matter how much it wants to.

The insistence with which Lagarde extols the merits of the digital euro, along with the ECB’s repeated assertions about its readiness to launch it, could be read as a sign of impatience with the EU parliament dragging its feet on regulation.

This was made explicit on April 8, 2025, when Piero Cipollone, Member of the ECB Executive Board, presented to the ECON Committee an update on the developments of the digital euro project, and at the same time urged members of the European Parliament (MEPs) to make progress on the legislative file.

Digital euro’s development

In 2021, at the height of the COVID-19 pandemic and the accompanying dramatic drop in physical cash payments, the ECB launched an investigation phase into a Eurozone CBDC to be used by citizens and businesses for retail payments. This lasted for two years, after which the central bank began the digital euro “preparation phase,” in November 2023.

After positive progress, in November 2024, the ECB called for partners to test conditional payments in a CBDC simulation to start in February 2025. When February rolled around, the ECB announced it was expanding the initiative to settle transactions between institutions with a wholesale CBDC payment system.

A month later, Lagarde reaffirmed the ECB’s commitment to the project, saying that the team behind the digital euro was “focused on accelerating the pace,” as well as highlighting how they were campaigning to get other stakeholders, like the EU Parliament and European Commission, on board.

Lagarde also said that the “testing phase” of the digital euro is scheduled to end this October. After that, the ECB will publish a final report and decide whether to issue a CBD, pending the necessary legislation.

More recently, on May 5, the ECB announced that it had established an “innovation platform” with 70 participants to collaborate on testing the digital euro project. According to the central bank, the platform simulates the envisaged digital euro ecosystem, “in which the ECB provides the technical support and infrastructure for European intermediaries to develop innovative digital payment features and services at European level.”

This brings us to the current state of limbo, with the ECB continuing tests but apparently already decided and united behind a digital euro, while the necessary regulation—as is often the case—plays catch-up.

Watch: CBDCs are more than just digital money