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The Eurozone, or Euro Area, is in the pilot phase. The European Central Bank announced in October 2023 that it would push forward to the next phase of its CBDC research after the past two years of broad investigations. This next phase, what is being called the preparation phase, will include establishing a legal framework, selecting technology providers, and building the infrastructure. In June 2024, the European Central Bank announced that it was working on and expanding a wholesale CBDC pilot.
The Eurozone includes Austria, Belgium, Croatia, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain. However, member countries are tracked separately due to varying projects that individual countries are leading. With that said, if the European Central Bank launches a CBDC, then all members will be moved to the launch phase.
In its October 2023 announcement, the European Central Bank repeatedly said that its CBDC (referred to as a digital euro) would be the “electronic equivalent to cash.” However, it's important to be clear that the CBDC would not be like cash at all. European Central Bank president Christine Lagarde has said in the past that, “When we surveyed Europeans, the first concern that they had… was privacy. Privacy is first and foremost on their mind when we divvy up the digital euro. [But] there would not be complete anonymity as there is with [cash.]”
Although the European Central Bank has often pointed to declining cash use as a reason to launch a CBDC, it seems an anti-cryptocurrency motivation is also at play. In 2023, Lagarde said, “The reason I’m personally convinced that we have to move ahead [with a CBDC] is a situation like the one we are in now. … I don’t want Europe to be dependent on an unfriendly country’s currency… or dependent on a friendly currency [that] is activated by a private corporate entity like, you know, Facebook or Google. … I don’t want Meta, Google, or Amazon to suddenly come up with a currency that will take over the sovereignty of Europe.”
In 2024, the European Central Bank announced it was looking for developers to work on different components of what would become a digital euro. The European Central Bank offered a total budget of €1.1 billion ($1.2 billion) across the five different requests for applications. Of the topics covered, the European Central Bank is seeking developers that can work on risk and fraud management, app development, offline service, secure exchanges, and alias services.
European Central Bank executive board member Piero Cipollone told the European Parliament Committee on Economic and Monetary Affairs that the central bank was looking for CBDC developers even without authorizing legislation because “Our readiness would be compromised if we started searching for possible suppliers only after that decision [to launch a CBDC] is made.” He also noted there would be restrictions on CBDC holdings, restrictions on who may hold the CBDC, and no interest payments. Cipollone later suggested a CBDC could be rolled out as soon as November 2025.
In June 2024, the European Central Bank announced updates regarding CBDC progress, privacy, and participants. In terms of progress, the European Central Bank released a report outlining both the plan moving forward and current efforts. Namely, the report covers privacy, holding limits, account limits, offline use, standardization, government contractors, and more. The report also noted that any decision to move forward would not be made until the end of 2025. On privacy, specifically, European Central Bank data protection officer Maarten G.A. Daman wrote a blog titled, “Making the Digital Euro Truly Private.” However, the blog merely says that a digital euro could be private, but it’s up to legislators to decide how know-your-customer and anti-money laundering efforts will be handled. Finally, as far as participants go, the European Central Bank announced that its wholesale CBDC pilot would be expanded to involve 48 private firms and 3 central banks in an effort to test the use of distributed ledger technology.
European Central Bank board member Piero Cipollone tried to explain how a digital euro would benefit the public in November 2024. He wrote that the digital euro would let people “pay digitally, seamlessly, anytime and anywhere.” However, he did not address how this universal acceptance would be achieved. Instead, he focused on describing instances in the current European market where someone might have “forgotten their wallet or don’t have enough cash.”
For additional information on concerns regarding violations of human rights and civil liberties, see the following reports by Amnesty International, Financial Tyranny Index, Freedom House, Human Rights Watch, Privacy International, and the U.S. Department of State. For additional information on concerns regarding the risks of CBDCs, see the following webpage and report by the Cato Institute: The Risks of CBDCs and Central Bank Digital Currency: Assessing the Risks and Dispelling the Myths.
For additional information regarding metrics, the methodology page explains each of the data points and provides their respective sources.