The European Central Bank is recruiting merchants for the next phase of testing of the digital euro, with the goal of launching a 12-month pilot program in the second half of 2027. The subject of the testing is a version of beta that closely resembles the digital euro, but it is not legal tender. If the project continues to progress, the European Central Bank sees 2029 as a possible time for issuance.
12-month test to be launched in 2027
This pilot is aimed at e-commerce and mobile merchants in the eurozone. The European Central Bank hopes to use this opportunity to test technical systems, operational processes, and user experience, rather than just conducting an internal technical exercise.
According to the plan, the tests will cover a variety of payment scenarios, including online shopping, in-store payments, mobile payments, and transfers between individuals. Staff from the European Central Bank and the central banks of the 19 eurozone countries will participate as users in the tests, working with selected merchants to complete the payment processes in different scenarios.
- Pilot start time: Second half of 2027
- Test period: 12 months
- Potential release date: 2029
Merchant coverage is considered crucial for advancement.
The European Central Bank had previously selected 36 banks and payment companies to enter the testing phase. Now, by further opening it up to merchants, it means that the focus of the project has shifted from the preparation of financial institutions to the establishment of an actual payment acceptance network.
For retail central bank digital currencies, whether they can be used by consumers depends not only on whether the technology is feasible but also on whether there are sufficient consumer scenarios. If the coverage of merchants is insufficient, it will be difficult for users to develop a stable habit of using these digital euros, even if they possess them.
Hedera, Vice President of Global Policy, stated to CoinDesk that the more challenging aspect of digital euros may not be policy communication, but rather their commercial implementation. She believes that merchants need sufficient incentives to adopt them on a large scale, and one approach could be for payment service providers to reduce the fees incurred when merchants accept digital euro payments.
The European Central Bank emphasizes the need to address the expansion of US dollar stablecoins
Although the legislation supporting digital euros has not yet been finalized, the European Central Bank continues to advance this project. One of the reasons behind this is the increasing use of dollar-backed stablecoins in Europe, which is changing the landscape of cross-border and digital payments.
The European Central Bank regards such private stablecoins as a source of pressure on the autonomy of the euro. The text mentions that Tether's USDT and Circle's USDC fall within this scope of concern. For the European Central Bank, the digital euro is not only a test of payment tools but also relates to the position of the euro within the digital payment system.
Next, whether the digital euro can progress as planned towards 2029 still depends on the progress of EU legislation and whether the European Central Bank's Management Committee will make a formal decision thereafter.
