ECB moves digital euro project into a two-year preparation phase

The European Central Bank's Governing Council decided on Wednesday to move its digital euro project into a preparation phase, which will start in November and last about two years.

During this phase, the ECB will work on finalising the rulebook for the digital euro and select providers that could develop the platform and infrastructure. The bank stressed that it has not decided whether to issue a digital euro. Any issuance would depend on European legislation, which is still being discussed by lawmakers.

The ECB presents the digital euro as a complement to cash, not a replacement. It would allow people to make electronic payments with central bank money across the euro area. Officials argue it would strengthen Europe's independence in payments, which are dominated by non-European card networks and technology companies. The project has faced questions, including:

• Privacy and how much the central bank could see of individual payments
• The risk that deposits move out of commercial banks in a crisis
• Whether there is sufficient demand from consumers

To address some of these concerns, the ECB has proposed holding limits and says it would not have access to personal payment data.

The debate in Europe is part of a global trend. Many central banks are researching digital currencies, while others, including the Federal Reserve, have not decided to pursue one.