A digital euro from the central bank could be a reality in three years.
The first users could pay with the digital euro in autumn 2026, said Bundesbank board member Burkhard Balz according to the speech on Wednesday at a conference in Frankfurt.
However, this would be the earliest date.
"By the end of the investigation phase in autumn 2023, the Governing Council will decide, in close cooperation with the European legislator, whether the implementation phase for the digital euro should be initiated," said Balz.
The digital euro could then be introduced, but not before autumn 2026, he believes.
The currency watchdogs of the euro area have been examining the possible introduction of a digital version of the European common currency for a while.
In mid-July 2021, the European Central Bank (ECB) decided to take the preparatory work to the next level: a two-year investigation phase will now focus on technology and data protection, for example.
It has not yet been decided whether a digital euro will come.
In any case, a digital euro would complement cash, not replace it.
Balz, who is responsible for the topics of payment transactions and settlement systems at the Bundesbank, accompanies the process as a member of a so-called "high-level task force".
"A digital central bank currency that is available to all citizens would ensure that the stabilizing effect of central bank money in payment transactions is maintained in the future," Balz advertised.
Popular payment solutions are currently often operated by international tech companies.
"A digital euro, on the other hand, could strengthen Europe's sovereignty in payment transactions." On Tuesday, at a virtual event organized by the digital association Bitkom, Balz protested against criticism that the agreed time frame was not ambitious enough.
He is convinced that central banks should proceed with due diligence and caution.
Digital central bank money is nothing less than a completely new form of money.
There should be no negative consequences for monetary policy and financial stability.
"I think we're going about things the right way by not rushing our analysis and our decision on whether to launch a digital euro or not," he said.
Central banks around the world are now examining the introduction of digital versions of their currencies.
With these projects, the central banks are responding, among other things, to the increasing digitization of payment transactions and the threat of competition from cyber currencies from international technology groups.
A digital central bank currency would be under their supervision.
so that this could ensure the stability of the currency.
In a kind of test laboratory, large financial companies are starting a twelve-week digital dollar pilot project in cooperation with the New York central bank branch of the Fed.
Citigroup, HSBC, Mastercard and Wells Fargo & Co. are also involved. They are supported by the New York Fed's Innovation Center, according to a statement published on Tuesday.
The project runs in a test environment and with simulated data.
The aim is to test how banks can help speed up payments by using digital dollar tokens in a shared database.
The head of the New York Fed's markets group, Michelle Neal, recently described a central bank digital dollar as promising for speeding up settlement times in the foreign exchange markets.
However, Fed leadership is divided on the need for a central bank digital currency: Vice Chair Lael Brainard is one of the supporters.
However, the Fed does not want to start such a project without the green light from politicians.
President Joe Biden has issued an executive order requiring the government to assess the risks and opportunities of digital money created by the central bank.