The digital euro has moved a step closer to becoming a new everyday payment option across the euro area, after members of the European Parliament’s Committee on Economic and Monetary Affairs backed the project’s legislative path this week. If EU institutions finalise the rules in 2026, the European Central Bank could launch a pilot in 2027 and make the new form of public digital money available to consumers in 2029.
The project is not designed to replace cash. Instead, the digital euro would work alongside banknotes and coins as a central bank-backed payment method for online purchases, person-to-person transfers and, eventually, payments in physical shops. EU lawmakers also voted in favour of keeping cash widely accepted, confirming that physical money remains part of Europe’s payment system.
Digital euro payments would work online and offline
The digital euro would be a digital form of central bank money. Unlike money held in a commercial bank account, it would be backed directly by the European Central Bank, in the same way that euro banknotes and coins are today.
Consumers would be able to use it through a payment app or wallet, including for online shopping and transfers between individuals. One of the main features under discussion is offline use, which would allow payments even during network disruptions. This is intended to give the digital euro some of the resilience and privacy associated with cash.
For consumers, basic use of the digital euro would be free. Large retailers could be required to accept it, while smaller businesses may receive exemptions or special conditions. The aim is to create a payment method that is widely available across the euro area, not tied to a single private company or national banking system.
Why Europe wants a public digital payment system
The debate is also about European payment sovereignty. At present, much of Europe’s card payment infrastructure depends on non-European companies, especially Visa and Mastercard. According to Reuters, around two thirds of the value of card payments in the euro area runs through those two US-based networks.
For EU policymakers, this dependence has become more politically sensitive. The digital euro is being presented as a way to ensure that people and businesses in the euro area can always access a European form of digital public money, even as payment habits shift away from cash.
The project also reflects broader concerns about the strategic role of payment systems. Digital payments are no longer only a consumer convenience. They are part of the infrastructure through which economic activity, data and financial autonomy are organised.
Cash remains part of the European model
EU institutions have repeatedly stressed that the digital euro would complement cash, not replace it. The European Commission’s 2023 single currency package included two parallel proposals: one to create the legal framework for a possible digital euro, and one to protect the legal tender status of euro banknotes and coins.
This distinction is politically important. Cash remains essential for people who do not use digital tools, for those who rely on it for privacy, and for situations in which digital systems fail. For that reason, the EU is trying to modernise public money without making access to physical money optional or marginal.
Fernando Navarrete Rojas, the European Parliament rapporteur for the file, said after the committee vote that the digital euro would “complement the cash option, never replace it” and that no one should be forced to give up cash.
Sweden’s e-krona shows the Nordic angle
The Nordic countries have already been central to the debate on digital money. Sweden, one of Europe’s most cash-light societies, began exploring a central bank digital currency years before the digital euro became a major EU legislative file.
The Swedish central bank (Sveriges Riksbank) launched its e-krona project in 2017 to analyse whether Sweden might need a state-issued digital currency. A practical pilot began in 2020 and tested how an e-krona could work as a complement to cash, including through digital wallets, banks as distributors and possible offline payments. The technical pilot ended in 2023.
The Riksbank now says its focus is on monitoring global developments in digital currencies, especially the ECB’s work on the digital euro. It has also argued that an e-krona could strengthen payment resilience by offering an alternative if bank or card systems suffer serious disruptions.
Sweden is not part of the euro area and still uses the krona. However, unlike Denmark, it has no formal opt-out from the euro and remains legally committed to adopting the single currency once it meets the necessary conditions. That makes the Swedish experience relevant beyond national borders: the e-krona is both a Nordic experiment and a case study for the future of public digital money in Europe.
A political decision still ahead
The digital euro is not yet a finished product. The European Parliament, the Council and the Commission still need to agree on the legislation. Key questions remain, including holding limits, compensation for banks and payment providers, merchant fees, privacy rules and the balance between public infrastructure and private intermediaries.
The European Central Bank has said it would decide whether to issue the digital euro only after the legal framework is adopted. If the current timetable holds, a pilot could begin in the second half of 2027, followed by a possible launch in 2029.
The next phase will determine whether the digital euro becomes a technical upgrade to Europe’s payment system or a more significant step in the EU’s effort to protect monetary sovereignty in a digital economy.
