The European Parliament's endorsement this week has removed what UBS calls the single highest obstacle to the digital euro, clearing the way for a launch the bank expects in 2029.
That would make the European Central Bank the first major western central bank to issue a retail central bank digital currency, capping more than a decade of preparation.
The legislation now enters its final trilogue phase between the Parliament, the Council and the Commission, a process UBS expects to take several months before a regulation is adopted.
Only then can the ECB's governing council decide whether to proceed, with a 12-month pilot phase potentially beginning in the second half of 2027.
The more telling part of the UBS analysis, however, is its candour about what the project is for, and the doubts over whether ordinary Europeans will embrace it.
The rationale has shifted markedly over time, the bank notes.
What began as a response to declining cash use and a reliance on foreign payment providers has become, above all, a question of strategic autonomy and monetary sovereignty.
UBS points to the rise of dollar-denominated stablecoins and the United States GENIUS Act as the key catalysts, with the ECB determined to keep central bank money as the anchor of an increasingly tokenised payments system.
International card schemes handle two-thirds of card transactions in the eurozone, and 13 of its 21 countries lack a domestic card scheme, underlining the dependence the ECB wants to reduce.
The digital euro would be public money for retail payments, sitting alongside cash rather than replacing it, and carrying legal tender status.
The ECB would control issuance and settlement while commercial banks handled customers.
Crucially, holdings would be capped, probably around €3,000, and would pay no interest, a deliberate design choice UBS says is meant to prevent deposits draining out of banks.
ECB officials have summed up the ambition as making the currency "successful, but not too successful".
Therein lies the tension UBS identifies.
The same features that protect financial stability also blunt the appeal.
With deposits already insured up to €100,000, the bank argues many households will struggle to see why a capped, interest-free digital euro improves on the bank and card payments they already use.
UBS also expects the currency to attract suspicion from activists who view such schemes as a threat to personal freedom, and concludes that take-up is likely to be gradual in the early years.
Despite those reservations, the bank backs the direction of travel.
Set against geopolitical fragmentation, the contest over monetary sovereignty and the pace of change in payments, UBS judges the project and the ECB's wider payments strategy to be the right strategic choices.
The criticism that the digital euro is a solution in search of a problem, it argues, misses the bigger picture
