A big moment for the digital euro - The Economist

The European Central Bank has moved the digital euro into its next phase of preparation, a step that shifts the project from years of research toward concrete design and testing. Crucially, this is not the launch of a new currency. A digital euro would be a central bank liability, like physical cash, but in electronic form — issued by the ECB rather than by commercial banks.

For markets, the significance lies in what it could change beneath the surface: how payments clear, how deposits behave in stress, and how much of the banking system's funding base remains stable. A widely held digital wallet could, in theory, give households a direct claim on the central bank, which is why officials have proposed holding limits and no remuneration on balances.

What to watch now is legislation. The ECB can build the infrastructure, but the euro's legal tender status and privacy rules depend on EU lawmakers. Until that framework is settled, timelines remain indicative rather than fixed.