The introduction of a digital euro could impose implementation costs of between €4 billion and €6 billion on European banks over four years, according to estimates presented by a senior European Central Bank official, underscoring the scale of operational adjustments facing the banking sector.
Piero Cipollone, a member of the ECB’s Governing Council, said the projected expenditure equates to roughly 3 per cent of banks’ annual spending on IT system maintenance. The ECB itself expects to incur around €1.3 billion in setup costs, with ongoing operational expenses estimated at about €300 million per year. The central bank is working with private contractors to build the infrastructure for the digital-only currency, which will be operated through accounts held directly with the ECB by euro area residents.
The project remains contingent on European Union legislation authorising issuance. The ECB argues that a digital euro would preserve the role of public money in an increasingly digital economy, help unify Europe’s fragmented payments landscape and reduce reliance on non-EU providers, strengthening monetary sovereignty and economic security. EU citizens outside the euro area could also use the digital currency if their national central bank reaches an agreement with the ECB.
Banks will distribute the smartphone applications required for digital euro payments and are expected to recoup implementation costs through merchant service fees. Unlike existing private payment networks, the ECB will not charge banks for use of its infrastructure. Merchants are set to benefit from a cap on fees for digital euro transactions, with charges below those currently applied by international card networks such as Mastercard and Visa.
The ECB is selecting lenders to participate in a pilot phase ahead of a planned 2029 launch. While banks face significant upfront expenditure, the structure of fees and network access leaves open questions about how revenue models will evolve once the digital euro becomes operational.
