When Will the Digital Euro Pilot Begin?
The European Central Bank is preparing the next step in its digital euro project, with Executive Board Member Piero Cipollone outlining plans to begin selecting payment service providers in the first quarter of 2026. A 12-month pilot is expected to begin in the second half of 2027, according to remarks reported by Reuters.
Cipollone spoke at a meeting of the Italian Banking Association, saying the pilot would involve a limited group of payment service providers, merchants and Eurosystem staff. The structure is designed as a controlled test before any broader rollout, which the ECB has previously linked to a potential 2029 launch, provided legislation is adopted in 2026.
The central bank moved the project into its next phase in October 2025. The timeline now outlined places operational testing firmly on the calendar, even as political negotiations over the legal framework continue in Brussels.
Investor Takeaway
How Will PSPs Be Involved?
EU-licensed payment service providers are expected to sit at the core of distribution. For firms selected, the pilot offers early operational exposure to onboarding processes, settlement mechanics and liquidity management under a central bank framework.
Cipollone said the arrangement would provide participants with clearer visibility on infrastructure requirements, compliance obligations and staffing needs, allowing them to assess future investment decisions ahead of a possible full launch.
The pilot format also gives selected providers direct interaction with the Eurosystem during testing. That interaction may influence final design choices around transaction flows, fee structures and technical architecture.
Is the Digital Euro Meant to Protect Banks?
The digital euro project has raised concerns among commercial banks that a central bank-managed account structure could reduce their role in retail payments. Cipollone addressed those concerns directly.
“Banks could lose their role in payments not just because of stablecoins but also due to other private solutions,” he said, adding that the digital euro is intended to “preserve the central position of banks in payments.”
He argued that changes in the payments industry already put pressure on banks, regardless of whether a central bank digital currency is introduced. Digitalisation has reduced the use of cash, currently the only form of central bank money available to the public. The ECB’s plan seeks to offer a public digital alternative as private payment options expand.
Investor Takeaway
What About Fees and European Card Networks?
Cipollone said the digital euro will also be structured to protect domestic European payment schemes such as Italy’s Bancomat and Spain’s Bizum. Europe remains heavily reliant on international card networks, with more than three quarters of transactions routed through companies such as Visa and Mastercard.
To address cost concerns, he outlined how merchant fees would be calibrated within the new system. “The cap on the fee that merchants will pay on the digital euro network will be lower than what the international payments network, normally the costlier, charge, but higher than what domestic payments scheme, normally the cheapest, charge,” Cipollone said.
Only eight of the 21 euro area members currently operate a national payments scheme. The digital euro framework is expected to interact closely with those domestic systems while reducing reliance on global networks.
What Comes Next Politically?
Legislation remains the decisive step before issuance. The European Parliament recently gave its first major backing to the project, while the EU Council has described it as key to Europe’s economic security. Formal approval is required to authorize the ECB to issue a digital currency available to the public and businesses across the euro area.
If the legal framework is enacted during 2026, the 2027 pilot would become the first large-scale operational test of a retail central bank digital currency in the euro zone. For payment providers and banks, the next year will revolve around technical preparation and regulatory clarity rather than live transactions.