EU to adopt mandatory CBDC by 2029

The EU has committed to adopting a mandatory central bank digital currency (CBDC) by 2029, potentially necessitating a compulsory digital ID for residents of all member states in the future.

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The EU plans to bring in a central bank digital currency (CBDC) by 2029 to replace standard financial transactions that occur digitally.

According to the European Central Bank’s website, the EU intends to fully implement the “digital euro” by 2029, assuming the relevant regulation, which just reached the final stage of negotiations, is adopted by the end of this year.

Following the regulation’s adoption, a 12-month pilot program will begin in the second half of 2027 to ensure a smooth rollout of the CBDC in 2029.

The Bank touts that over 50 payment service providers (PSPs) have already signed on to join the digital euro pilot, and they are now calling on e-commerce and mobile commerce merchants to sign up to participate in the beta before the official rollout.

The European Commission states that the digital euro “would offer greater choice to consumers and businesses in situations where physical cash cannot be used”.

This would include all purchases over €10,000, as the EU just announced they were banning all cash purchases above this level starting in 2027 to combat “money laundering”, making the digital euro CBDC effectively mandatory to live as a citizen of the EU — insofar as someone would want to purchase a home, car, etc.

Cash will still be available in the EU, as it is currently protected in law, but it isn’t clear for how long after the digital euro is fully implemented. In fact, a video from the European Commission cites the natural decline of cash use compared to digital transactions in the EU as a major reason for adopting the new digital euro.

Another justification cited is that the EU doesn’t want international companies processing payments anymore, preferring to handle all European digital transactions internally at a central bank.

The European Committee has also addressed concerns regarding mandatory digital IDs, saying that offline payment options for the digital euro will exist, but that it will be up to PSPs to decide whether they support or require the European Digital Identity Wallet (EUDI).

However, given the fact that all transactions will be processed by the central bank, there isn’t much stopping the Bank from linking transactional data to other non-financial personal data that the EU might have already collected on any one person.