The European Central Bank plans to allow blockchain-based transactions to settle in central bank money by 2026. This move aims to integrate blockchain systems into Europe’s financial infrastructure, preventing market fragmentation. The ECB’s digital euro infrastructure will interact with other central bank digital currencies for cross-border payments.

The ECB has completed technical preparations for the digital euro, selecting potential system providers and testing settlement mechanisms. However, progress is contingent on a legal framework approved by EU lawmakers. If legislation is adopted in 2026, pilot transactions could start in mid-2027, with a first issuance targeted for 2029.

Privacy concerns have intensified as the digital euro project progresses. The ECB opposes a programmable digital euro and offers offline payment options for privacy. This contrasts with recent EU proposals on data retention and anti-money laundering, raising concerns about user privacy and data access for the digital euro.

Political negotiations are underway for the digital euro’s legal framework, with the Council of the EU and European Parliament aiming to finalize their positions by May 2026. Privacy, data access, and democratic oversight are key issues. Public interest in the digital euro remains uncertain, with many Europeans preferring cash and traditional bank accounts.

Read more at Yahoo Finance: ECB Confirms DLT Transactions Coming in 2026 as Digital Euro Privacy Debate Heats Up