According to a report in the Financial Times, the European Union is ramping up its efforts to develop a digital euro, considering the use of public blockchain networks like Ethereum and Solana for its launch and transaction settlement.
This push comes after the recent enactment of stablecoin legislation in the United States and the dominance of dollar-backed digital currencies. This landscape has fueled concerns within European institutions about the euro’s standing in the digital payment space.
The European Central Bank (ECB) provided an update on its ongoing preparations in its third progress report. This included outlining the drafting of rules, conducting user research, and establishing an innovation platform with around 70 market participants, as detailed in its July 16 press release and the accompanying report.
As outlined on the ECB’s project webpage, the current preparation phase is slated to continue until October 2025. Following this, the Governing Council will decide on the subsequent steps. However, issuing a digital euro will require legislative approval from the EU.
Strategic independence is a key motivating factor. In April, Piero Cipollone, a member of the ECB’s Executive Board, informed the European Parliament’s ECON committee that a digital euro would lessen the EU’s reliance on payment systems originating outside the bloc. He also said it would foster a robust foundation for retail payments, as noted in the ECB’s introductory statement and the linked BIS publication.
These comments highlight the need for a clear legal framework and the policy goal of establishing central bank-backed digital money as a primary payment method, both online and offline.
The necessary regulatory framework is already in place. The EU’s Markets in Crypto-assets (MiCA) regulation, officially Regulation 2023/1114, became effective in June 2023.
Provisions within MiCA addressing e-money tokens and asset-referenced tokens have been active since June 30, 2024. The broader set of regulations covering crypto-asset service providers took effect on December 30, 2024, according to ESMA, the European Commission’s delegated-acts portal summary, and the Official Journal entry.
This phased implementation gives EU regulators a consistent framework for supervising euro-denominated digital tokens and service providers in advance of any potential CBDC launch.
The consideration of public blockchains hints at a distribution model that could integrate with existing digital wallets and tokenized assets while still enforcing regulatory rules through intermediaries. The ECB’s ongoing work streams are focusing on privacy, holding limits, and offline functionality as key design considerations. However, the central bank’s July documents emphasize that no specific architecture has been chosen yet.
The Financial Times article indicates that exploring Ethereum and Solana represents a shift in policy consideration rather than a definitive decision. This aligns with the ECB’s current technology-neutral stance.
Europe already has examples of using public blockchains in institutional finance. In April 2021, the European Investment Bank (EIB) issued a €100 million two-year digital bond on the Ethereum blockchain, as documented in the EIB’s press release. Central banks have also experimented with public blockchain infrastructure for wholesale CBDCs.
BIS Project Mariana, involving the Banque de France, the Monetary Authority of Singapore, and the Swiss National Bank, successfully tested cross-border foreign exchange trading of wholesale CBDCs using decentralized finance (DeFi) principles on a public blockchain, according to the BIS overview and the final report in PDF format. These trials, while not prejudging any ECB decisions, illustrate how tokenized central bank liabilities can function on permissionless networks.
Governance and compliance would rely on established rules and supervised intermediaries operating under MiCA regulations. The selected technology would impact how the digital euro interacts with tokenized deposits, securities, and stablecoins.
The ECB has consistently stated that the issuance of a digital euro depends on the approval of EU lawmakers. External timelines suggest that a political agreement is unlikely before 2026, as Reuters reported in May. The preparation phase is currently on schedule, according to the ECB’s July update, with ongoing testing involving market participants within the established innovation platform.
This policy shift, which includes considering Ethereum and Solana, occurs as EU regulators implement MiCA on stablecoin issuers and service providers. Concurrently, the ECB is refining its approach to privacy and offline functionality for a possible retail CBDC.
The assessment of public chains is underway, the legislative pathway remains a critical hurdle, and no definitive technology or issuance decisions have been made to date.