The European Central Bank (ECB) is expanding its efforts to develop a blockchain-based payment system, a move that could lead to the issuance of a digital euro—an official central bank digital currency (CBDC).

Two Phases of the Digital Payment System Implementation

The project to establish a new digital payment infrastructure will be implemented in two phases:

1. The first phase involves the development and launch of a payment platform that will enable settlements in central bank money through integration with the existing TARGET system. This system is already used for interbank transactions, ensuring the free flow of cash, securities, and collateral across the eurozone.
2. In the second phase, the ECB plans to explore a deeper integration of blockchain technology into the central bank’s settlement system. This will allow faster, more secure, and more transparent financial transactionsdirectly on a blockchain.

As Piero Cipollone, a member of the ECB’s Executive Board, noted, integrating blockchain into the payment system will be a significant step in enhancing European financial market efficiency through innovation.

As Piero Cipollone, a member of the ECB’s Executive Board, noted, integrating blockchain into the payment system will be a significant step in enhancing European financial market efficiency through innovation.

Why Is the Digital Euro Important?

The digital euro is more than just a new form of money. The project aims to achieve several key goals:

• Faster and more secure digital payments across Europe.
• Reducing dependence on international payment systems and foreign financial intermediaries.
• Strengthening the eurozone’s economic independence by establishing an autonomous financial infrastructure.

According to the ECB, the introduction of the digital euro is an essential step toward creating a single capital market in Europe.

The Road to the Digital Euro

The ECB began researching the creation of a digital euro in 2021, initially focusing on design and distribution modelsfor the currency.

Two years later, the bank outlined specific priorities for the project and moved into the first phase of implementation. This phase includes detailed development of the blockchain-based payment platform and consultations with both public and private sector stakeholders.

The exact timeline for the digital euro’s launch remains undisclosed, but the ECB has promised to provide updates as the project progresses.

In the future, the digital euro could become an integral part of Europe’s financial ecosystem, offering fast, secure, and efficient transactions for millions of people.