Digital Euro: The ECB’s Next Chapter in Sovereign Payments
- Andrea Llamas
- Oct 6
- 4 min read
In a quiet but critical shift, the European Central Bank (ECB) has formally advanced the development of the digital euro — a central bank digital currency (CBDC) designed to future-proof European monetary sovereignty and recalibrate the balance between public infrastructure and private innovation in payments.
On October 2, the ECB announced that it has signed framework agreements with a selected group of private technology providers, each tasked with developing one of five technical components of the digital euro. These agreements are the outcome of a competitive tendering process that opened in January 2025, inviting firms from across the continent to apply for participation in what may become the most foundational redesign of European payments infrastructure in decades.
While the ECB has made no commitment to launch the digital euro at this stage, the signing of these agreements indicates a clear intention: to be ready. Development will only begin if and when the Digital Euro Regulation is adopted, but the foundational architecture is now within reach.
How the Digital Euro Will Work
The digital euro is envisioned as a retail-facing CBDC issued directly by the Eurosystem and distributed through supervised intermediaries such as banks, payment service providers, and fintech platforms. It will complement physical cash, not replace it, ensuring continued access to central bank money in a rapidly digitizing economy.
Unlike decentralized cryptocurrencies, the digital euro will be centrally issued, universally accepted, and non-interest bearing. It will be accessible via mobile apps, integrated into bank platforms, and usable both online and offline. The ECB will retain control over issuance, settlement, and monetary governance, while the user interface and commercial offerings will be managed by intermediaries and private sector partners.
A two-tiered distribution model is at the core of the project: the Eurosystem provides the settlement infrastructure and currency issuance, while commercial entities deliver user-facing services, manage customer relationships, and add value through layered features. The model is designed to protect financial intermediation, while ensuring public access to sovereign digital money.
The Providers Shaping the Next Phase
Following the January call for tenders, the ECB has appointed five primary technology providers across the digital euro’s core infrastructure components. Each firm will prototype its assigned domain in collaboration with the Eurosystem. Development work is conditional on legislative approval in the next phase.
Sapient GmbH and Tremend Software Consulting will develop the alias lookup functionality, which allows users to send payments using simplified identifiers like phone numbers or email addresses, rather than technical payment details. This capability will be foundational to user adoption and ease of use across mobile platforms.
Feedzai, a Portugal-based leader in AI-driven risk technology, will provide the fraud detection and risk management layer. Their systems specialize in behavioral analytics and real-time transaction monitoring, ensuring that digital euro payments can be safeguarded without compromising speed or scalability.
Almaviva SpA and Fabrick SpA, two Italian technology firms with significant experience in digital financial services, will lead development of the reference mobile application and the software development kit (SDK). These tools will enable intermediaries to integrate digital euro functionality into their platforms efficiently and securely.
Giesecke+Devrient, a German firm long associated with euro banknote production and digital security systems, has been tasked with designing the offline payment component. This feature will allow for small-value payments without internet connectivity, critical for ensuring resilience and inclusion.
Senacor FCS will be responsible for the secure exchange of payment information. This component underpins the interoperability of the entire system, enabling compliant communication between intermediaries and the central infrastructure.
These vendors were selected not only for their technical competence, but for their ability to deliver infrastructure that can scale across the EU’s diverse banking and regulatory landscape. Each prototype will be designed for modular integration, ensuring adaptability as legislative and market conditions evolve.
Viability, Not Just Infrastructure
Crucially, the ECB has signaled that the digital euro is being developed with commercial sustainability in mind. Payment service providers (PSPs) and financial intermediaries will be permitted to charge for value-added services layered atop the core infrastructure. This framework aligns the incentives of the private sector with the ECB’s public mandate and is intended to drive organic adoption rather than enforced compliance.
For the European payments ecosystem, the introduction of a digital euro creates the conditions for standardized, real-time settlement across borders, lower transaction costs, and programmable payment logic. Combined with innovations in net terms and embedded finance — including platforms like TreviPay — the digital euro could eventually support programmable credit issuance, supply chain automation, and decentralized finance rails built within a regulated structure.
It also lays the foundation for reasserting European sovereignty in the digital financial space, reducing dependence on non-European card networks, stablecoins, and cross-border transaction intermediaries.
The ECB’s two-tier model represents a shift in central banking strategy — from sole issuer and regulator to infrastructure coordinator. It will be incumbent upon PSPs, banks, and eCommerce firms to align their systems with the technical and legal contours of this emerging ecosystem.
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