Euro: The European digital euro project has moved another step forward. The Economic and Monetary Committee of the European Parliament supported rules under which the new digital form of money issued by the European Central Bank should work both online and offline, protect user privacy, and at the same time not threaten the stability of the banking system.
The digital euro is coming back to life as one of the most important topics in European finance. This is not another cryptocurrency in the usual sense of the word, nor a stablecoin issued by a private company. It would be a digital form of central bank money, or a so-called CBDC. The European Union presents it as a complement to cash and card payments, not as a replacement.
The Economic and Monetary Committee of the European Parliament on Tuesday approved its position on the package of rules for the digital euro by a vote of 43 to 14. The vote does not yet mean final approval of the entire legislation, but it is an important political signal. The European Parliament has clearly shown how it envisions the basic framework of the future digital currency.
Rapporteur Fernando Navarrete Rojas after the vote emphasized that the aim of the package is to protect citizens’ freedom to decide how they want to pay. According to him, the digital euro should “complement, never replace” cash. This very statement is fundamental to the entire project. European institutions have long been trying to dispel concerns that the introduction of the digital euro will pave the way for the retreat of banknotes and coins.
Article contents:
- The digital euro should work even without internet
- Privacy should be one of the pillars of the proposal
- No interest and with holding limits
- Basic services free, additional services with limited fees
- Banks and regulated crypto firms should be involved in distribution
- Launch expected in several years at the earliest
- Europe is also preparing its own stablecoin
- Battle for the future of digital money
The digital euro should work even without internet
The approved proposal envisages that the digital euro will be issued by the European Central Bank and that it will be usable in two modes. Online payments would work through an account system, similar to today’s digital payments through a bank account or payment app. However, the offline mode is more interesting.
Offline payments should be based on local storage of money in a device. In practice, the digital euro in this form would behave similarly to cash. A user could pay even without internet connection, but would also bear the risk of loss. If they lost the device on which they have offline digital money stored, they could lose these funds just as when they lose a wallet with banknotes.
The offline function is precisely one of the points by which the European Union wants to differentiate itself from ordinary digital payments. These are today typically dependent on the internet, payment infrastructure of banks, card companies or technology firms. The digital euro should offer an alternative that will be available even in situations when ordinary digital payments fail.
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Privacy should be one of the pillars of the proposal
A large part of the debate around the digital euro concerns privacy. Critics of CBDC fear that a central bank digital currency could lead to greater control of payments by the state or institutions. The European Parliament has therefore included privacy protection principles in the proposal from the very design of the system.
According to the approved position, mechanisms should be built into the digital euro that will limit the processing of personal data to only what is absolutely necessary. According to the proposal, the European Central Bank should not have access to users’ personal identification data. For transactions, the use of advanced technologies is also envisaged, which should enable payment verification without unnecessary disclosure of data.
However, this does not mean that the digital euro will be anonymous in the same sense as cash in all situations. The distinction between online and offline payments will be crucial for privacy protection. The offline mode should be closest to cash, while online payments will have to function in a regulated financial environment.
No interest and with holding limits
The digital euro should not be an investment product or a digital savings account. According to the proposal, it will not bear interest and users will not be able to earn money on it. Similarly, it should not be burdened with negative interest. The aim is for the digital euro to serve for payments, not for moving large volumes of money from commercial banks to the central bank.
That is precisely why holding limits are also envisaged. Each individual would be able to hold only a certain amount of digital euros. According to the proposal, the specific upper limit would be set by the European Commission based on the recommendation of the European Central Bank and would be regularly reviewed. The purpose of the limits is to prevent a situation where people would massively withdraw money from ordinary bank accounts and transfer it to the digital euro.
For companies, the rules should be even stricter. Businesses would not be able to regularly hold the digital euro as a balance. The exception would be only short-term receipt of payments, for example for a period of 24 hours. This is also how the EU wants to prevent the digital euro from turning from a payment instrument into an alternative to bank deposits.
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Basic services free, additional services with limited fees
The proposal envisages that basic services associated with the digital euro will be free for users. For example, opening an account, access to funds or ordinary payments should be free of charge. Offline transactions should be completely free.
Payment service providers could charge fees for premium services, but even these should be limited. The proposal envisages capping some fees between merchants and providers. The digital euro should thus be commonly usable even for people who do not want to pay for basic access to digital money.
Banks and regulated crypto firms should be involved in distribution
The digital euro should not be distributed only directly through the European Central Bank. The proposal envisages a broader model in which banks, payment service providers, electronic money institutions, postal services and also regulated crypto-asset service providers will be involved.
This is also important for the cryptocurrency market. The EU is signaling that it does not want to separate the digital euro from the emerging digital asset infrastructure, while insisting that entities involved operate under supervision and within regulatory frameworks.
According to the proposal, most merchants in the eurozone should accept the digital euro. Exceptions would apply, for example, to some small businesses and sole traders who do not accept other digital payments either. The proposal also addresses situations where a merchant could temporarily refuse the digital euro, such as during a power outage.
Launch expected in several years at the earliest
Although the European Parliament committee has advanced the proposal, the digital euro is not yet a done deal. The European Central Bank must finalize technical rules, build infrastructure, conduct pilot tests, and agree on the responsibilities of individual actors before a potential launch. Only after the final legislation is approved would at least a two-year preparation period follow.
The European Central Bank began preparing the foundations of the digital euro project back in 2020. However, the project has repeatedly faced delays, partly due to unfinalized legislation. According to statements from ECB representatives so far, the actual launch of the digital euro is expected around 2029 at the earliest.
Europe is also preparing its own stablecoin
The digital euro is not the only project through which Europe is trying to strengthen its position in the world of digital payments. Alongside the central bank’s public project, there is also the private Qivalis initiative. This European banking consortium is working on a regulated stablecoin pegged to the euro.
Qivalis has grown to 37 member institutions in recent weeks after being joined by 25 banks from 15 countries. New members include ABN AMRO, Rabobank, Nordea, and Intesa Sanpaolo. The Amsterdam-based consortium is targeting a stablecoin launch in the second half of 2026.
Qivalis supervisory board chairman Howard Davies said the project is not just about building payment infrastructure. According to him, the ambition is to embed European principles of data protection, financial stability, and regulation into the new generation of digital money.
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Battle for the future of digital money
European initiatives are coming at a time when the stablecoin market is dominated by tokens pegged to the US dollar. According to CoinGecko data, dollar-based stablecoins make up the overwhelming majority of the market. This is a strategic problem for European institutions. If digital finance and blockchain payments remain almost exclusively dependent on the dollar, Europe would play only a secondary role in the new payment infrastructure.
The digital euro and euro stablecoin are therefore not necessarily competitors. Rather, they represent two different paths to the same goal: to strengthen European control over digital payments and offer an alternative to American payment networks, dollar stablecoins, and global technology companies.
In this context, Rojas pointed out that Europe does not have to choose between the digital euro and private payment solutions. According to him, it needs both. Existing infrastructure should be used where it makes sense, and new standards should be open to banks, payment companies, and innovative players.
For the average user, this means one thing: digital money in Europe is gradually moving from the realm of debates and pilot projects into legislative and technological preparation. The digital euro is not yet at the door, but after the recent vote, it is one step closer to reality.
