The Council of the European Union adopted a negotiating position on the digital euro. The member states agreed on a model that enables both online and offline payments. This means the Council departs from the position of the European Parliament, which provided exclusively for an offline version.
The decision paves the way for negotiations between the Council and Parliament on the legal framework of the digital central bank currency (CBDC). The Danish Minister for Economic Affairs, Stephanie Lose, described the digital euro as an important step towards a robust European payment system. “The digital euro can contribute to Europe’s strategic autonomy and economic security and strengthen the international role of the euro,” the minister said. Denmark currently holds the rotating presidency of the EU Council.
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Conflict between Council and Parliament over functionality
With its position, the EU Council is focusing on maximum flexibility. Users should be able to use the digital euro at any time – regardless of whether an internet connection is available. The offline function ensures resilience in the event of power outages or network disruptions. At the same time, the online variant enables a broader range of digital payment transactions.
Fernando Navarrete, rapporteur of the European Parliament for the digital euro, is pursuing a different strategy. The former Spanish central banker is calling initially for an exclusively offline version. This would function as a token-based form of digital cash without account linkage. Navarrete argues that the offline version offers maximum data protection – comparable to cash. Payments would not need to be routed through or recorded by central infrastructures.
According to Navarrete, the online variant should only be introduced if the private sector has not developed its own solution by 2029. The European Central Bank rejected this approach, however. Limiting functionality would undermine the benefits of a central bank currency, the ECB said. The Council follows this assessment with its decision of 19 December.
Holding limits to protect financial stability and bank deposits
The Council text provides for holding limits on digital euro balances. These limits are intended to prevent users from using the digital euro as a store of value. They also protect the banking system from large-scale deposit outflows. The ECB sets the specific limits but must comply with a maximum cap agreed by the Council. This cap will be reviewed at least every two years.
On behalf of the legislators, the ECB examined various holding limits between 500 and 3'000 euros per person. The analysis confirmed that limits can effectively contain deposit outflows. Even under an extremely conservative crisis scenario with a limit of 3'000 euros, financial stability would not be endangered, according to the ECB. A study by Copenhagen Economics found, however, that at this cap up to 739 billion euros in bank deposits could flow out. This corresponds to ten percent of the total deposit base of private households in the euro area.
Business customers will have a holding limit of zero euros. They can use the digital euro for certain payments but cannot accumulate balances. Private users can make higher payments by linking their digital euro wallet to a bank account. Payments above the holding limit are then automatically debited from the linked account.
Fee model with five-year transition phase
Payment service providers must offer certain basic services free of charge. However, they may charge fees for additional functions. The Council agreed on a transition phase of at least five years. During this period, interchange and merchant fees will be capped. The ceiling is based on the level of comparable payment instruments.
Spain proposed limiting the interchange fee to 0.2 percent during the transition phase. This corresponds to the cap for debit cards under the EU Interchange Fee Regulation of 2015. After the five years have elapsed, fees are to be calculated on the basis of actual operating costs. This model takes into account the fact that the costs of payment service providers are not yet known at the start.
The ECB described the digital euro as a cost-efficient alternative to Europe’s fragmented payment landscape. However, under the current concept, only merchants bear the costs via acceptance fees. These include an appropriate profit margin for the payment service providers involved. An ECB analysis estimates that banks in the euro area will need to invest between four and 5.8 billion euros over four years to connect their systems.
Two-year preparation phase completed
The ECB launched the digital euro project back in 2021. Progress, however, depended heavily on political agreements. The European Commission presented a legislative proposal in 2023. Nevertheless, the member states needed more than two years to find a common position.
The ECB completed its two-year preparation phase in October 2025, which had begun in November 2023. The most important outcomes include a draft rulebook for the digital euro as well as the selection of providers for platform components and infrastructure. In addition, the central bank ran an innovation platform for experiments with market participants. A technical team examined the integration of the digital euro into the existing payment ecosystem.
The European Parliament must now develop its own final position. Formal negotiations between Parliament and Council can then begin. If the legislators reach an agreement in 2026, the ECB could launch a pilot phase in 2027. The first issuance of the digital euro to the public would be possible no earlier than 2029. The ECB is working on the basis of this timeline and is preparing the necessary technical capacity.
Strategic autonomy as the main argument
The Council’s position emphasises data protection. The text provides for a high level of privacy protection for payments and transfers. EU representatives are responding to public concerns regarding surveillance and data use. In parallel with the digital euro, the Council agreed on a regulation to protect cash. This reaffirms that euro banknotes and coins remain the only legal tender in the euro area and must be widely accepted.
The Danish Council presidency identified three central political points of contention: governance of holding limits, data protection, and the remuneration model. The decision of 19 December addresses all three areas. The limits will be managed through close coordination between the ECB and national authorities. Data protection is aligned with cash standards. The fee model enables cost recovery for payment service providers while maintaining price controls during the introduction phase.
At the euro summit in October 2025, European heads of state and government called for an acceleration of the project. The Council decision responds to this call. The member states view the digital euro as an instrument to strengthen European payment sovereignty. At the same time, it is intended to reduce dependence on foreign payment providers and to promote the international role of the euro.
