ECB's Lagarde Prioritizes Digital Euro Rollout After Rate Hold

2025-12-19 17:20:22

Source: DefiPlanet Original Title: ECB’s Lagarde Prioritizes Digital Euro Rollout After Rate Hold Original Link: https://defi-planet.com/2025/12/ecbs-lagarde-prioritizes-digital-euro-rollout-after-rate-hold/

Quick Breakdown

ECB holds key interest rates unchanged at 3.25% amid cooling inflation.
Lagarde highlights digital euro as next priority for payment system upgrades.
Preparatory work on CBDC advances with pilot testing underway in 2026.

ECB President Christine Lagarde announced on December 18 that the European Central Bank will hold its key interest rates steady while pivoting attention to the digital euro rollout. The deposit facility rate remains at 3.25%, the main refinancing rate at 3.40%, and the marginal lending facility at 3.65%. This decision comes as eurozone inflation eases to 2.3% in November, nearing the ECB’s 2% target.

Lagarde emphasized the digital euro’s role in modernizing Europe’s payment infrastructure. The ECB is now entering the preparation phase for its central bank digital currency (CBDC), with plans for potential issuance by 2028, pending political approval. This shift follows years of investigation into privacy features, offline functionality, and integration with existing euros.

Digital Euro Prepares for 2026 Pilots

The ECB’s digital euro project aims to offer a digital version of cash for peer-to-peer transactions and online payments. Lagarde noted strong public interest, with over 40,000 survey responses supporting the initiative. Pilot programs will test interoperability with commercial banks and wallets starting next year, addressing concerns over financial inclusion and cyber risks. Banks like Société Générale have already experimented with euro stablecoins on blockchains, paving the way for hybrid models.

With a 2025 Eurozone growth forecast at 1.0%, backed by wage growth and lower energy prices, ECB’s Lagarde sees confidence in disinflation despite geopolitical risks. The stable market reaction, with the euro holding steady, allows the ECB to prioritize the digital euro. This digital currency could challenge private stablecoins and enhance Europe’s Web3 position. Traditional finance is integrating blockchain, evidenced by MiCA crypto regulations. Meanwhile, some projects have released detailed technical documents to ensure full legal compliance with the EU’s MiCA regulation, aiming to boost institutional adoption and allow seamless integration into European financial platforms. Strategic compliance supports the expansion of decentralized infrastructure for real-world applications, like smart cities and AI, within a harmonized legal framework.

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