European Central Bank provides digital euro update, plans September 2027 pilot with 36 payment providers

In an interview, European Central Bank Executive Board member Piero Cipollone provided an update on the digital euro after the European Parliament backed the project by almost 70%. He described the vote as an important step for the initiative’s legitimacy and said the ECB plans to launch a small-scale pilot in September 2027, involving merchants, banks and employees of the ECB and national central banks as users. More than 50 European payment service providers applied to take part and 36 were selected, with the pilot set to run for 12 months. Cipollone said the digital euro is designed to complement cash, support payments across online, in-store and person-to-person use cases, and reduce Europe’s dependence on non-European payment infrastructure. On privacy, he said offline payments would offer cash-like privacy, with transaction details known only to payer and payee, while online payments would be encrypted and not identifiable by the central bank. He also outlined a business model under which the ECB and national central banks would set the rules, without charging scheme or processing fees, while merchants would be required to accept the digital euro for digital payments and would be protected by a cap on fees. He said current estimates put Eurosystem development costs at about EUR 1.3 billion and annual operating costs at about EUR 320 million, while banks’ preparation costs over four years would amount to no more than 3.4% of their annual IT upgrade budgets. Separately, on monetary policy, Cipollone said the ECB is currently seeing the direct and indirect effects of higher energy prices, but not second-round effects, and is focused on keeping medium- to long-term inflation expectations anchored at 2%.