Digital euro

The Eurosystem is examining and preparing for the possibility of issuing central bank money in digital form. This potential means of payment for euro area citizens is referred to as the digital euro. A digital euro would actually be a digital form of cash.

The digital euro is still at the planning stage and no decision has yet been taken on its issuance. If it were to be issued, it would be a digital version of our euro single currency, available to everyone in the euro area. It would not replace euro banknotes or coins, but rather function as an additional payment instrument. A digital euro could be used for payment in shops, online or from person to person, and for government sector payments, such as financial support and taxes.

Central bank money in digital form already exists in the central bank current accounts held by banks, but for citizens the only form of central bank money available has been cash. A digital euro could be thought of as the next stage in the evolution of money.

Purpose of a digital euro

One of the tasks of the Eurosystem is to ensure that payment systems are reliable and efficient, also in an increasingly digitalised environment. With the reduced use of cash and the spread of electronic payment methods, central banks around the world have begun to look at the possibility of issuing a central bank digital currency.

Digital payment solutions used by Europeans are also currently very dependent on non-European payment providers.

The aim of a digital euro would therefore be to strengthen the role of the euro area’s central bank money as a monetary anchor and to increase Europe’s strategic autonomy and boost competition in the euro area’s payment services.

Timetable for a digital euro

In October 2023, the Governing Council of the European Central Bank (ECB) took the decision to proceed to the preparation phase of the digital euro project. This phase will last two years, during which the Eurosystem will prepare for the potential future and will focus on developing the payment model for the digital euro.

No decision has yet been taken on the issuance of a digital euro, however. The preparations now being made are for the possibility that issuance will later be seen as necessary. Before a decision can be made on this, a considerable amount of preparatory work and information gathering will be needed. There is therefore reason to expect that any issuance of a digital euro would still be a number of years away.

As part of the Eurosystem, the Bank of Finland participates actively in the digital euro development work. The project’s main decision-making body is a high-level working group in which the Bank of Finland is represented by Member of the Board Tuomas Välimäki. The final decision on proceeding with the project lies with the ECB’s Governing Council.