The European Central Bank (ECB) has announced a comprehensive strategy for the digital euro, aiming to modernize central bank money and counter the influence of dollar-pegged stablecoins in Europe. ECB President Christine Lagarde emphasized the need to prevent "digital dollarization" of the continent, positioning the digital euro as a key player in retail payments, wholesale tokenized settlement, and cross-border interoperability. The strategy introduces two major projects: Pontes, a distributed ledger technology-based wholesale settlement solution, and Appia, a long-term exploration of a shared European ledger. Pontes aims to integrate with the ECB's existing TARGET Services by Q3 2026, while Appia could eventually provide a unified digital infrastructure across the eurozone. The digital euro is expected to be ready for issuance by 2029, with a pilot phase potentially starting in mid-2027, pending EU legislative developments in 2026. By promoting the digital euro, the ECB signals potential regulatory challenges for dollar-pegged stablecoins in Europe, highlighting the eurozone's advanced position in central bank digital currency (CBDC) development compared to other Western economies.