On Tuesday the European Central Bank advanced the digital euro project by naming 36 payment service providers to join a large-scale pilot that will begin in the second half of 2027.

The ECB said the firms were chosen from more than 50 applicants across the euro area and will work with the central bank plus 19 national central banks, excluding Bulgaria and Malta, throughout the 12-month exercise.

The pilot will examine technical infrastructure, operational processes and user experience, allowing person-to-person and person-to-business payments to be tested online and offline before any issuance decision.

The move brings the project closer to practical trials with consumers, merchants and providers and marks one of the most important steps since the preparation phase started in late 2023.

Participants include traditional banks, digital banks and payment companies, among them several major European institutions such as Deutsche Bank, UniCredit, Revolut, Adyen and Stripe.

ECB Executive Board member Piero Cipollone noted the strong interest showed the payments industry was prepared to help shape the next stage.

"The robust market response demonstrates the private sector's readiness to engage and move the digital euro project forward to strengthen European payments," Cipollone said.

"We look forward to closer work with European payment service providers to develop a secure, efficient and inclusive digital euro," he added.

Legislative approval remains the decisive milestone

The pilot takes place while the European Parliament, the Council and the European Commission continue negotiations on legislation that would create the legal foundation for a digital euro.

The ECB has repeated that it cannot issue the currency until lawmakers adopt the required rules.

Current plans point to formal approval in 2027, completion of the pilot and a possible public launch in 2029, though all dates depend on the legislative timetable.

The digital euro would be offered free to consumers through supervised providers, and the ECB has sought to ease concerns about the loss of cash or reduced privacy.

Under present plans the digital euro would pay no interest and holdings would be limited to limit outflows from commercial bank deposits.

Speaking exclusively with Euronews last week, ECB President Christine Lagarde welcomed the European Parliament's decision to open legislative talks and stressed that the digital euro is meant to complement cash.

"Cash and the digital euro will both be legal tender, so nowhere in Europe can anyone refuse banknotes," Lagarde told The Europe Conversation with Maria Tadeo, confirming cash will remain part of the monetary system.

The digital euro is also intended to reduce reliance on international payment providers and reinforce Europe's strategic autonomy.

Lagarde said the project supports economic sovereignty as well as payment modernisation, given continued dependence on foreign networks.

"We depend mainly on US and sometimes Chinese systems to handle payments. We need a European solution to stay sovereign at home," Lagarde stated.