On Friday, the EU Council approved a negotiating position for a digital euro that works both online and offline. This approach differs from earlier European Parliament proposals, which focused only on offline functionality.
Under the Council’s plan, the European Central Bank (ECB) will publicly issue the digital euro. Users can make transactions anytime, whether connected to the internet or offline.
How Online and Offline Transactions Will Work
European Parliament rapporteur Fernando Navarrete had recommended an offline-only model to protect privacy and maintain resilience, with the ECB acting as regulator.
The Council’s model allows online payments to be processed immediately through the central bank’s ledger or authorised intermediaries. Offline payments will record locally and sync with the central ledger once connectivity returns. This ensures usability in low-connectivity areas while keeping cash-like privacy.
Purpose of Introducing a Digital Euro
The ECB aims to modernise the payment system and keep central bank money relevant in an increasingly digital world. As cash usage declines, the digital euro will support monetary sovereignty and maintain public trust in the currency.
Design Features and Limits
Council ministers highlighted offline usability for convenience and resilience during power outages. At the same time, online access will enable a broader range of digital payments.
The Council also proposed limits on digital euro holdings to prevent financial instability caused by mass withdrawal of deposits from banks. The ECB will set these limits, and an overall cap will be reviewed every two years.
Fees, Services, and Transition Rules
Providers must offer basic digital euro services free of charge, but they can charge for premium features. During a transition period of at least five years, interchange and merchant fees will match existing payment methods. Afterward, fees will adjust based on actual costs.
Next Steps Toward Implementation
The Council’s agreement allows negotiations with the European Parliament on the legal framework. Once adopted, the ECB can issue the digital euro. The ECB plans a pilot phase in 2027, with full rollout expected by 2029.
