Lagarde urges digital euro law by end-2026, pilot set for 2027

Key points

• Lagarde says digital euro regulation should be adopted by end-2026
• ECB plans a 12-month internal pilot in the second half of 2027
• September euro-area inflation was 3.8%, core 2.5%, per the ECB
• ECB raised rates 25 bps in both June and September

European Central Bank President Christine Lagarde said on Saturday that the ECB is preparing a digital euro to complement cash in everyday payments, and that a 12-month internal pilot is planned for the second half of 2027. She spoke in a statement to the International Monetary and Financial Committee at the IMF Annual Meetings, as reported by Cointelegraph.

What Lagarde said about the digital euro

According to the ECB’s published text, Lagarde said adopting the Regulation establishing the digital euro “by the end of 2026 is key to making this possible.” That makes the legislative step, rather than a public launch, the near-term milestone. The statement describes an internal pilot in the second half of 2027, not a consumer rollout.

Cointelegraph quoted her as saying the digital euro will further stimulate innovation and competition in retail payments. The outlet’s headline describes the project as imminent, but the ECB statement itself points to the end-of-2026 regulation target and the 2027 pilot as the next steps.

Inflation and interest-rate backdrop

The remarks came alongside Lagarde’s assessment of the euro-area economy. She said headline inflation rose to 3.8% in September, driven mainly by higher energy prices, while core inflation edged up to 2.5%. Higher energy costs are expected to keep headline inflation well above the ECB’s target into the first half of 2027, she said, with a return to about target toward the end of 2027.

The ECB Governing Council raised its key interest rates by 25 basis points in September, following an increase of the same size in June, according to the statement. Lagarde said the energy shock is too large to “look through,” but that a measured response remains appropriate to keep inflation in check. She also said financing conditions have tightened, with long-term rates rising notably since the previous meeting, which she expects to slow growth.

She listed upside risks to inflation, including the conflict in the Middle East. A more persistent energy shock, she said, could strengthen indirect and second-round effects on prices.

Why it matters for stablecoins and payments

A central bank digital currency for retail use would compete with private payment options, including card networks and, potentially, stablecoins. Lagarde has previously framed the project as a public alternative to private payment systems, according to coverage of earlier remarks. The statement released Saturday does not address stablecoins directly.

Cointelegraph also noted that on Sept. 21 the ECB launched Pontes, a system that lets financial institutions settle wholesale tokenized-asset transactions in central bank money, as an alternative to private settlement assets such as stablecoins. The outlet reported that it initially offers a core set of services, with full implementation expected by 2028.

What happens next

The digital euro still depends on the EU legislative process. Lagarde’s call for adoption of the regulation by the end of 2026 sets the timetable the ECB says it needs for the pilot to start in the second half of 2027. The ECB has not announced a date for a public launch in the statement.