Shaping Europe's payment future: the digital euro's road to 2029

 

The project is entering its real-world testing era. Banca d'Italia's Agnese Gentile on the road to the 2027 pilot and Europe's push for greater autonomy in payments.

Agnese, could you please describe where the digital euro project currently stands?

In November 2025, the ECB Governing Council approved the transition to the next phase of preparatory work on the digital euro, following the overall achievement of the objectives set for the previous stage. The goals of this new phase represent a major step forward in the development of the digital euro aimed at ensuring that both the Eurosystem and the market are ready for a potential issuance, once the European legislative process is completed. Should the digital euro regulation be adopted by 2026, the digital form of our common currency could become available in digital wallets by 2029.

While the ECB Governing Council can formally decide on issuance only after the regulation is in place, the Eurosystem is preparing to launch a 12-month pilot phase, set to begin in September 2027. This initiative would enable digital euro payments within the central banks’ premises using a beta version of the digital euro, featuring most of its intended functional and technical capabilities. Still, it will differ from the digital euro, as it will be a digital means of payment issued by the Eurosystem central banks, considered as “scriptural money,” falling under the current definition of funds. 

How is the design of the digital euro evolving as the pilot approaches?

The design of the digital euro is progressively moving from a conceptual framework towards a more operational and implementation-oriented phase. As pilot activities approach, the focus is on testing how the digital euro could work in real-life payment scenarios before any potential scale-up, while meeting the policy objectives defined by the Eurosystem.

Key priorities include assessing usability, resilience, privacy, interoperability, and scalability. The pilot will assess both online and offline payment functionalities, integration with existing payment ecosystems, and the interaction with private-sector intermediaries, which will remain central in customer-facing services.

At its core, the pilot is about moving from design to reality, answering very concrete questions: are we technically and operationally ready, is the payments ecosystem ready, and - crucially - does it work for users? Because success is not only about infrastructure, but about usability, trust, and real-life adoption.

What role does Banca d’Italia play in the digital euro pilot phase and in the broader development of the project?

Banca d'Italia brings long-standing experience in developing and operating Eurosystem market infrastructures and payment systems. First Banca d’Italia contributed to the development of TARGET2 and TARGET-2 Securities, then led the way for implementing TARGET Instant Payment Settlement (TIPS), which today also supports settlements in Swedish kronor and Danish kroner.

Building on this expertise, Banca d’Italia is now one of the six national central banks responsible for designing and deploying key core components of the Digital Euro Service Platform (DESP).

Banca d’Italia is also firmly supporting digital euro pilot activities by enabling employees to test online and offline digital euro payments in real-life scenarios, including person-to-person and person-to-business payments within its premises. 

Overall, Banca d'Italia has been actively engaging with market participants to promote awareness of the project’s activities. 

What role will payment service providers and other stakeholders play in the pilot?

This pilot is the first real-world exercise conducted by the Eurosystem on the digital euro. As such, we are deliberately starting in a controlled and focused environment, within the premises of the ECB and national central banks, including Banca d'Italia. Participation will be limited to a selected number of payment service providers, users, and merchants.

We have recently closed the application process for the selection of payment service providers that will support the Eurosystem in executing digital euro payments, and we expect to announce the outcome in July. More than 50 European PSPs applied, signalling a strong engagement by the industry.

Selected PSPs will need to demonstrate solid technical capabilities, proven operational reliability, and strong end-user support experience, including participation in previous pilot initiatives where relevant. In return, they will gain first-hand experience with the digital euro’s design and technical specifications, and – more importantly - a direct channel to provide feedback that will help shape the final design.

Technical service providers (TSPs) will have a role too. Although they will not interact directly with the Eurosystem in the pilot, TSPs will be able to support PSPs in delivering their solutions. This reflects a broader ecosystem approach, with room for collaboration across different industry players.

How will the pilot address user experience and adoption among citizens and businesses?

The pilot places strong emphasis on user experience, as adoption will ultimately depend on how intuitive, reliable, and seamless the digital euro feels in everyday use.

Real transactions will be executed, with people paying for goods and services using a “beta digital euro” issued by the Eurosystem. While it will not have legal tender status, it is designed to replicate the future digital euro as closely as possible. The focus will be on a limited set of use cases: person-to-person payments, both online and offline, and person-to-business payments in an online environment.

Eurosystem staff will act as consumers, with approximately 5,000 to 10,000 employees expected to participate and interact with a very limited network of merchants. This creates a real-life but still controlled environment.

Feedback from participating users and merchants will be central to the exercise. It will help refine the design, improve usability, and test how the digital euro is communicated, as clarity and trust will be essential for adoption. It will also provide valuable insights into onboarding, payment flows, and integration with existing habits and tools.

Equally important is ensuring that intermediaries can deliver a smooth and familiar customer experience, building on their existing relationships with users and businesses.

Ultimately, the pilot is about one key question: not only whether we can build a digital euro, but whether we can make it work simply, safely, and at scale for everyday payments in Europe.

What measures are being considered to prevent bank disintermediation?

Financial stability is one of the core tasks of the Eurosystem, and the digital euro is being designed in a way that does not pose risks to the financial system.

The digital euro will be distributed through payment service providers, who will maintain the direct contractual relationship with end users, including onboarding and managing digital euro wallets, as in today’s payment models.

To avoid deposit substitution effects, holdings in digital euro wallets will not be remunerated and subject to holding limits. At the same time, these limits will not restrict payment functionality. By linking a digital euro wallet to a payment account, users will be able to make online payments above the holding limit, with any shortfall covered instantly, provided sufficient funds are available in the linked account. This ensures that the digital euro remains fully usable for everyday payments without requiring pre-funding of the wallet.

How could the digital euro reinforce Europe’s strategic autonomy and strengthen monetary sovereignty in the eurozone?

As highlighted by the ECB President Christine Lagarde and echoed by the Executive Board member Piero Cipollone, the digital euro is about ensuring that Europeans continue to have access to a public, trusted, and universally accepted digital means of payment. Today, most euro area countries rely on non-European providers for everyday payments, while existing domestic solutions often remain fragmented and nationally limited. Addressing this fragmentation is increasingly important in a digital and geopolitically complex environment.

Against this backdrop, the digital euro would provide a public, pan-European payment solution under European governance, helping to reduce external dependencies in retail payments and strengthen Europe’s strategic autonomy. The governance and design of the infrastructure are central to this vision. The Digital Euro Service Platform (DESP) is being developed with a strong European footprint, with key components provided by European firms and critical infrastructure elements managed by Eurosystem central banks.

A key enabler of this vision will be the digital euro scheme rulebook, which is essential to ensuring harmonised standards, interoperability, and a consistent user experience across the euro area. By defining common rules and procedures and relying on open standards, the rulebook will help translate policy objectives into a functional and integrated European payment ecosystem. Significant work is already underway with market participants to develop the digital euro scheme.

Overall, the digital euro represents a strategic opportunity to strengthen the resilience, sovereignty, and future readiness of Europe’s payments landscape while preserving trust in public money in the digital age.

Looking five years ahead, how do you expect the retail payment landscape in Europe to change once the digital euro is introduced?

Looking five years ahead, following the introduction of the digital euro, I would expect a more integrated, resilient, and competitive European payments landscape.

Individual users would benefit from a simpler payment experience across borders, whether online, offline, peer-to-peer, or in-store, at no additional cost. With the digital euro in place, Europeans will also have access to a truly public and European payment option, which complements cash. In this way, public money will be fit for the digital age, allowing citizens to choose the payment method that best suits their needs.

Merchants could gain broader acceptance, lower complexity, and benefit from reduced fees.

Rather than replacing private solutions, the digital euro will act as a common public infrastructure layer that fosters innovation, competition, and interoperability. PSPs could extend their solutions beyond national borders, benefitting from the shared infrastructure and open standards set for digital euro payments.

Overall, the ambition is that the digital euro will be more than a new means of payment: it will be a step towards a more unified, innovative, and user-centric European payments ecosystem.

About Agnese Gentile 

Agnese is Advisor to the Digital Euro Unit at Banca d’Italia and a member of the digital euro rulebook development group, shaping the rules and procedures of the future digital euro payments scheme. She brings extensive expertise in financial market infrastructures and payment systems, gained at the ECB through work on TARGET Services operations, governance and large-scale market onboarding, and major service rollouts.

 

 

 

About Banca d’Italia 

Banca d’Italia is the Italian central bank and a core member of the Eurosystem. Within Banca d’Italia, the Digital Euro Unit directly works on the digital euro project. It plans, coordinates, and monitors the initiatives needed for the design and implementation of the digital euro project, including regulatory, research, communication, and training activities. In cooperation with the ECB and other central banks, the Digital Euro Unit manages the technical design activities, including developing, testing and maintaining the digital euro payment infrastructure (DESP).