The digital euro is a proposal by the European Commission, currently at an advanced stage of legislative development, aiming to introduce a new form of central bank money in digital format, directly accessible to the public — meaning citizens and businesses — for retail payments. It is neither a private cryptocurrency nor a mere electronic payment tool, but rather a public infrastructure that would complement euro banknotes and coins, ensuring the continued role of central bank money in the digital environment. The initiative has two primary goals: to preserve public trust in central money as payments become increasingly digital and to strengthen the European Union’s strategic autonomy in response to the rise of third-country digital currencies and private payment solutions (e.g., stablecoins).
The context behind this proposal is marked by a decline in the use of cash, the dominance of electronic payment systems managed by private — often non-European — actors, and the risk that commercial money (created by banks) could become completely detached from central bank money. Without a digital equivalent of the euro guaranteed by the ECB, citizens would risk losing access to a secure and neutral monetary anchor, which could in turn undermine the monetary sovereignty of the euro area.
According to the proposed legal framework, the digital euro would be available for both online and offline use. Offline transactions would allow direct payments between users without intermediaries, with no processing of personal or transactional data. In this way, it would replicate the privacy and anonymity of cash. Importantly, the ECB would not enter into contractual relationships with users: distribution and account management would be delegated to payment service providers (PSPs), who would use central bank reserves to meet demand. To avoid destabilising the banking system by making the digital euro a savings instrument, no interest would be paid and limits could be imposed on the amounts individuals are allowed to hold.
Legally, the digital euro is expected to be granted legal tender status, meaning it would be required to be accepted for payments across the euro area, with limited exceptions. This is a key element in ensuring equivalence with cash, but it has triggered intense debate. Public consultations revealed widespread concerns about potential increased centralised control, the gradual elimination of cash, vulnerability to cyberattacks or technical failures, and the potential impact on privacy and fundamental freedoms.
On the technical side, the project entered its preparation phase on 18 October 2023, following a two-year investigation phase launched by the Eurosystem in 2021. This current phase is expected to last until late 2025 and involves the finalisation of a digital euro rulebook, the selection of providers to build the digital euro infrastructure, and testing to ensure compliance with requirements for user experience, privacy, financial inclusion, and environmental sustainability. At the end of this period, the ECB Governing Council will decide whether to proceed with the issuance and deployment of the digital euro.
Legislative Process and Timeline
- 28 June 2023: The European Commission presented the Digital Euro legislative package, including:
- Proposal for a Regulation on the establishment of the digital euro (COM/2023/369).
- Proposal on the provision of digital euro services by PSPs in non-euro Member States (COM/2023/368).
- Proposal on the legal tender status of euro banknotes and coins (COM/2023/364).
- Assigned Parliamentary Committee: Committee on Economic and Monetary Affairs (ECON).
- Initial Rapporteur: Stefan Berger (EPP); succeeded in December 2024 by Fernando Navarrete Rojas.
- February 2024: Former rapporteur Berger tabled his draft report. Amendments were submitted on 21 February.
- September 2024: ECON committee was updated during a public hearing on the preparation phase of the digital euro.
- June 2024: ECB published its first progress report on the preparation phase.
- Q1–Q2 2025: Ongoing legislative discussions and consultation of relevant stakeholders, including the LIBE Committee for data protection and fundamental rights.
The legislative proposal is currently under review in the European Parliament, with a final decision expected once the technical and political assessments are complete. The legal act will enable, but not oblige, the ECB to issue the digital euro, establishing a uniform framework across the euro area and defining essential rules on privacy, access, usage limits, and distribution.
In sum, the digital euro represents an ambitious attempt to redefine the role of public money in a rapidly evolving digital landscape where technological innovation, geopolitical competition, and new forms of private financial intermediation challenge the foundations of monetary sovereignty. Yet the path forward remains deeply political: it is a balancing act between innovation and control, inclusion and freedom, efficiency and accountability.
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