Key Highlights
- EU Council agrees on negotiating stance on digital euro legislation.
- Digital euro designed to work offline and offer a high level of privacy.
- The new rules reinforce cash acceptance as legal tender.
The European Union (EU) has taken a formal step toward a digital euro. On Friday, the EU Council agreed on its official negotiating position on legislation that would allow the issuance of a central bank digital currency while also strengthening the legal role of physical cash.
The move does not greenlight the digital euro itself, but it clears the political path. With the Council aligned, talks can now begin with the European Parliament on a legal framework that could enable the European Central Bank (ECB) to launch a digital euro later this decade.
A digital euro, not a cash replacement
Under the Council’s position, the digital euro would sit alongside cash, not replace it. The proposal frames the digital euro as public money directly backed by the ECB, designed to keep central bank money at the core of Europe’s payments system as transactions move increasingly online.
Key design features include online and offline use, meaning payments could work even without internet access. The text also emphasizes a “high degree of privacy” for payments and transfers, a point repeatedly stressed by EU officials amid public concern over surveillance and data use.
To avoid financial stability risks, the Council supports caps on how many digital euros individuals can hold. The ECB would set holding limits within a lawmaker-defined cap, reviewed every two years, to stop the digital euro from draining bank deposits.
Fees, access, and payment rails
The proposal also targets the plumbing of the system. Payment service providers would be barred from charging consumers for basic digital euro services, such as opening accounts, making payments, or moving funds in and out of wallets. Extra features could still carry fees.
To prevent gatekeeping, device and platform providers must grant fair access for digital euro payments. Fees would be capped for at least five years, then set by actual costs. EU officials also linked the plan to strategic autonomy, with Danish ministers saying a digital euro could strengthen Europe’s payment resilience and cut reliance on foreign-controlled networks.
Cash still king, by law
Alongside the digital euro, the Council agreed on a regulation aimed squarely at protecting cash. The proposal reinforces that euro banknotes and coins remain the only legal tender in the euro area and should be widely accepted.
In practice, the Council wants to curb the growing trend of “card-only” or “cashless” businesses. Non-acceptance of cash would be effectively banned, with narrow exceptions such as online purchases or unmanned points of sale. Retailers may express a preference for digital payments, but outright refusal would be restricted.
What to expect
With the Council’s mandate in place, negotiations with the European Parliament will begin. Only once the legislation is adopted will the ECB decide whether to issue the digital euro.
The central bank has already signaled its timeline. If laws are approved by 2026, pilot testing could start in 2027, with a potential rollout around 2029. The ECB estimates development costs of roughly €1.3 billion, with annual operating expenses of about €320 million.
The timing fits a wider regulatory shift in Europe. Brussels is also weighing stronger powers for the European Securities and Markets Authority (ESMA), potentially creating a more centralized, SEC-style supervisor for capital markets and crypto platforms. Together, the moves suggest Europe is preparing not just for digital money but for tighter, more unified control over how it circulates.
Also read: Ripple Partners with AMINA Bank for Faster Crypto Payments in Europe
