The European Union is making significant progress in the development of a digital euro, with a focus on exploring public blockchains such as Ethereum and Solana for issuance and settlement. This move comes in response to the increasing dominance of dollar-pegged stablecoins in the market and concerns about the euro’s role in digital payments.
The European Central Bank has been actively working on the digital euro project, with preparations including rulebook drafting, user research, and collaboration with around 70 market participants. The timeline for the project indicates that a decision on the next steps will be made by the Governing Council after the preparation phase concludes in October 2025. However, issuance of the digital euro would still require EU legislation.
The core policy driver behind the digital euro project is strategic autonomy, aiming to reduce dependence on non-EU payment rails and establish a resilient retail payments system for the European Union. The regulatory framework for crypto-assets, including stablecoins, has already been established in the EU, providing a harmonized platform for supervising euro-denominated tokens and service providers in anticipation of a central bank digital currency (CBDC) launch.
The consideration of public blockchains like Ethereum and Solana for the digital euro project represents a shift towards a more technology-neutral approach by the ECB. While no final decision has been made on the architecture of the digital euro, the exploration of public chains aligns with the ECB’s efforts to leverage innovative solutions in institutional finance.
The use of public blockchains for institutional finance is not new in Europe, with examples like the European Investment Bank issuing a digital bond on Ethereum in 2021. Central banks have also experimented with public-chain infrastructure for wholesale CBDCs, demonstrating the potential for tokenized central bank liabilities on permissionless networks.
As the ECB continues its preparations for the digital euro, governance and compliance will be key considerations, with technology selection shaping interoperability with tokenized assets. The timeline for a political deal on the digital euro is expected no earlier than 2026, with the ECB continuing to engage with market participants through an innovation platform framework.
Overall, the assessment of public blockchains for the digital euro project marks a significant development in EU’s efforts to establish a digital currency. While the legislative pathway remains a crucial factor, the exploration of Ethereum and Solana demonstrates a commitment to leveraging innovative technologies for the future of digital payments in the European Union.