MILAN (Business Emerge): The EU Council has agreed on a negotiating position for the digital euro that supports functionality for both connected and disconnected environments. The position confirms that the digital euro would be issued by the European Central Bank and made available for use regardless of internet access. The framework allows transactions to be carried out online through existing payment infrastructure as well as offline through locally stored value that can later be reconciled with central systems.
The decision was taken during a Council meeting held in mid-December and applies across all member states of the European Union. Finance ministers representing national governments endorsed the approach as part of ongoing legislative work to establish a legal basis for a central bank digital currency. The framework defines the European Central Bank as the issuing authority while allowing supervised intermediaries to support distribution and user-facing services.
Under the proposed structure, online transactions would be processed in real time using central bank infrastructure or approved private payment providers. Offline transactions would be stored on user devices and synchronised with the central ledger once connectivity is restored. This design allows the digital euro to function in areas with limited network access and during temporary disruptions. The framework also introduces quantitative safeguards, including limits on individual digital euro holdings. These limits would be set by the European Central Bank and reviewed periodically, with an overall cap reassessed every two years to address financial stability considerations.
Work on the digital euro began as part of broader efforts to adapt payment systems to changes in consumer behaviour. Use of physical cash has declined across several EU countries, while digital payments have expanded rapidly. The European Central Bank has stated that a publicly issued digital currency would ensure continued access to central bank money in electronic form. Earlier discussions included proposals that focused solely on offline use, but the Council position incorporates both modes to widen usability and operational resilience.
The framework has implications for the financial sector and payment markets within the European Union. Banks and payment service providers would be required to offer basic digital euro services without charge, while fees could apply to additional features. Interchange and merchant fees would be capped during a transition period lasting at least five years, with levels aligned to existing payment instruments. After this period, fee structures would be adjusted based on observed costs. The inclusion of holding limits is intended to reduce the risk of large-scale shifts of deposits away from commercial banks.
The Council’s agreement enables formal negotiations with the European Parliament to begin on the final legal text. Once legislation is adopted, the European Central Bank would be able to proceed with issuance preparations. The bank has indicated that a pilot phase could take place in 2027, followed by broader availability later in the decade. An operational launch by 2029 has been outlined, subject to legislative approval and technical readiness.
