ECB Prepares for Digital Euro Integration with Blockchain Settlements by 2026
The European Central Bank (ECB) plans to allow blockchain-based settlements to be settled in central bank money starting in 2026, integrating distributed ledger technology (DLT) into the euro area's monetary infrastructure. These DLT settlements are expected to occur directly without private intermediaries, aiming to prevent fragmentation in tokenized markets. The system will also be capable of cross-border use alongside other central bank digital currencies (CBDCs).
To protect privacy and ensure security, proposed safeguards include holding limits and no interest on holdings. An offline payment option is planned, allowing offline balances to be stored locally for device-to-device transactions. This feature is designed to enhance privacy amid ongoing debates over data access.
Technical preparations for the digital euro are largely complete, with a two-year preparation phase ending in October 2025. A readiness phase is underway, involving system provider selection and settlement testing. However, a legal framework approved by EU lawmakers is still required before further progress.
ECB President Christine Lagarde stated that the digital euro is technically ready, noting that responsibility for design now lies with politicians. The EU Council agreed on its negotiating position on December 19, paving the way for talks with the European Parliament, which is expected to finalize its stance by May 2026. Should legislation be adopted in 2026, pilot digital-euro transactions could begin as early as mid-2027, with the first issuance targeted for 2029.
Privacy concerns remain at the forefront of discussions. The ECB does not support a programmable digital euro but has proposed offline privacy protections. Meanwhile, EU anti-money laundering (AML) rules plan to ban crypto accounts that enable anonymized transactions starting from 2027, intensifying the regulatory focus. Public interest in the digital euro remains uncertain; a March 2025 ECB consumer survey found many Europeans see little need for such a currency, highlighting the importance of trust and education for adoption.
