Lagarde Says ECB Is Preparing Digital Euro to Complement Cash

European Central Bank President Christine Lagarde said the bank is preparing a digital euro as a digital equivalent of cash for everyday payments, with public and private payment options expected to coexist.

“The digital euro will further stimulate innovation and competition in retail payments,” Lagarde said at the IMF Annual Meetings on Saturday.

The ECB selected 36 payment service providers for a 12-month pilot planned for the second half of 2027. The planned uses include online and offline payments, transfers between people, e-commerce and purchases in physical stores. The pilot is part of a broader effort to create a payment option across the euro area. More than two-thirds of euro-area card transactions are processed under rules set by non-European companies, while 13 euro-area countries rely on international card schemes or mobile-payment services for in-store purchases.

Separately, a potential first issuance in 2029 depends on EU lawmakers adopting the required regulation in 2026. The ECB would decide whether to issue the digital euro after the regulation is adopted. The ECB’s pilot plan and potential issuance timeline were previously announced.

Lagarde also discussed inflation. Euro-area inflation was 3.8% in September, largely reflecting high energy costs, she said. The ECB expects energy costs to ease next year, while an expected energy shock is forecast to keep inflation above the bank’s target through the first half of 2027. Lagarde said a measured policy response remains appropriate.