The European Central Bank is edging closer to a full-fledged digital euro pilot, signaling a shift from exploratory talks to concrete testing. In remarks delivered after an executive committee meeting of the Italian Banking Association, ECB Executive Board member Piero Cipollone outlined a staged timetable that prioritizes the selection of payment service providers (PSPs) in early 2026 and a 12-month pilot during the second half of 2027. The plan envisions a small group of PSPs, merchants and Eurosystem staff participating in the initial phase, with broader involvement contingent on legislative and technical readiness. The remarks underscore the bank’s aim to validate a central bank digital currency in practical settings while preserving the integrity of European card schemes and keeping banks at the core of the payments ecosystem. held
Cipollone stressed that the digital euro would be designed to protect European card schemes and preserve banks’ central role in Europe’s payments system, a framing that aligns with Reuters’ coverage of the central bank’s approach. The pilot is intended to be modest in scope at the outset, focusing on a limited number of PSPs, merchants and Eurosystem staff to test onboarding, settlement and liquidity management in a real-world environment. This phased approach is positioned to give participating PSPs an early-readiness edge should a broader rollout follow, while generating practical data on infrastructure, compliance and staffing costs for planning purposes.
Key takeaways
- PSP selection for the digital euro pilot is scheduled to begin in the first quarter of 2026, setting the stage for a 12-month trial in the latter half of 2027.
- The pilot will involve a limited cohort of PSPs, merchants and Eurosystem staff, enabling hands-on testing of onboarding, settlement and liquidity management within a controlled environment.
- European authorities emphasize that the digital euro is intended to shield domestic payment ecosystems and card schemes, rather than displace them, with a focus on preserving the role of banks in payments.
- Governance and cost visibility are key aims of the pilot, offering participating players clearer insights into future infrastructure, compliance and staffing needs.
- Industry expectations are shaped by a longer-term roadmap that includes potential broader rollout and a 2029 launch target, contingent on legislative progress in 2026 and subsequent regulatory steps.
Market context: The push for a digital euro sits within a broader European effort to modernize payments, reduce dependence on international card networks, and ensure a stable, centrally governed digital currency option for residents and businesses. The central bank’s framing of the pilot as a way to protect domestic systems while engaging with private sector participants mirrors ongoing debates around stablecoins and private payment solutions that could otherwise erode the traditional banking role in payments.
Why it matters
The ECB’s move toward a structured pilot signals a careful balance between innovation and incumbency. By enabling a controlled test environment that includes EU-licensed PSPs and direct Eurosystem involvement, the central bank aims to gather actionable data on how a digital euro could function in real commerce. This includes practical issues around onboarding new users, ensuring seamless settlement between participants, and managing liquidity—areas that have historically proven complex for central bank digital currency platforms to operationalize at scale.
From a banking perspective, the digital euro is envisioned not as a threat to banks, but as a mechanism to preserve their centrality in a payments landscape that increasingly incorporates digital solutions. Cipollone highlighted that the project would aim to protect domestic payment rails and card schemes while offering a more cost-efficient option for merchants. The stated goal is to place a cap on merchant fees for the digital euro network that would be lower than the charges typical of international card networks, yet higher than those charged by domestic schemes. This pricing dynamic is designed to keep EU-based payment ecosystems competitive while ensuring that the digital euro remains attractive to merchants and consumers alike.
European policymakers are also mindful of broader industry shifts. The plan explicitly notes the European Bancomat and Bizum-type networks as areas where the digital euro could help preserve domestic alternatives against private, cross-border payment rails. In this context, the pilot is less about displacing existing networks and more about integrating a central bank digital currency in a way that complements, rather than competes with, established infrastructures. This approach aligns with the broader aim of safeguarding financial stability and ensuring that Europe maintains strategic control over its payments architecture as new digital forms of money emerge.
What to watch next
- First-quarter 2026: Official PSP selection process begins, narrowing the field for the pilot.
- Second half of 2027: Primary 12-month digital euro pilot period commences with participating PSPs and merchants.
- 2026–2027: Legislation and regulatory steps to enable or adjust digital euro deployment, shaping the timeline for broader rollout.
- 2029: Potential full-scale launch if legislative and technical milestones are met and stakeholders achieve sufficient readiness.
- Ongoing infrastructure planning: ECB and Eurosystem continue to map future ecosystem costs, staffing needs and compliance requirements tied to the digital euro’s operation.
Sources & verification
- ECB press release and accompanying document outlining the PSP selection and pilot plans (Sp260218) and related materials.
- Reuters coverage detailing Cipollone’s remarks and the digital euro design goals to protect European banks’ card schemes.
- Cointelegraph reporting on the digital euro trajectory, including references to the 2029 launch plan and next-phase progression.
- Historical reporting on the ECB’s progression toward a digital euro, including discussions around legislation timelines in 2026.
ECB advances digital euro pilot as PSP selection begins in 2026
The European Central Bank is advancing toward a tangible digital euro pilot, signaling a transition from theoretical exploration to real-world testing. The plan, presented in the wake of a meeting with the Italian Banking Association’s executive committee, centers on naming payment service providers (PSPs) in early 2026 and launching a 12-month trial in the second half of 2027. The pilot’s initial footprint will be deliberately modest: a limited cadre of PSPs, a handful of merchants and Eurosystem staff will participate to validate core operational flows, including onboarding, settlement and liquidity management. This approach aims to deliver measurable insights while preserving the primacy of existing European card schemes and banks within the payments system.
In explaining the design philosophy, Cipollone stressed that the digital euro should bolster domestic payment networks rather than replace them. By anchoring the rollout in EU-licensed PSPs, the ECB seeks to ensure merchant access, interoperable settlements and a governance structure that keeps banks at the center of the payments ecosystem. The broader objective is to strike a balance between innovation and stability—allowing the digital euro to co-exist with established rails while mitigating the risk of private, non-government-controlled systems displacing traditional players.
A key element of the planned approach is the potential to test and refine future infrastructure, compliance and staffing costs. The pilot’s visibility into these cost dimensions could inform investment decisions for PSPs and banks, helping them plan capital deployment with greater certainty. Direct Eurosystem involvement is intended to yield practical feedback from participants, shaping both product design and governance arrangements as the project evolves.
Beyond the technical and financial considerations, the ECB’s digital euro initiative is framed as a strategic safeguard for Europe’s payments sovereignty. The project explicitly envisions protecting local networks, such as Italy’s Bancomat and Spain’s Bizum, from losing ground to private, cross-border platforms. In Cipollone’s view, the digital euro should offer an affordable alternative for merchants—pricing that is lower than the typical charges on international networks but higher than the minimums charged by domestic schemes. This pricing nuance reflects a deliberate effort to maintain domestic competitive advantages while embracing the efficiencies associated with central bank money in digital form.
As policymakers weigh the next steps, observers will be watching how the proposed timeline aligns with legislative developments in 2026 and how the pilot’s findings influence the path toward a broader rollout. The ECB’s timeline currently contemplates a 2029 launch under favorable regulatory and technical conditions, with a potential early start to the pilot if legislation is enacted in 2026. This braided timetable underscores the delicate balance the central bank must strike between experimentation, market readiness and fiscal prudence in a rapidly evolving digital payments landscape.