The European Union took a key step in its digital currency project as the EU Council backed a negotiating position for a digital euro with both online and offline use. The move sets up talks with lawmakers and the European Commission on the design of a potential central bank digital currency. It also marks a split from earlier proposals in Parliament that focused only on offline payments.
“The EU Council on Friday backed a negotiating position for a digital euro that includes both online and offline functionality, diverging from earlier European Parliament proposals that focused solely on offline usage.”
The decision matters because it signals how Europe wants people and businesses to pay in the future. It also shapes privacy rules, the role of banks, and the reach of public money in the single market. Formal negotiations are expected to address consumer protections, merchant costs, and technical standards.
What Is at Stake
The European Central Bank has studied a digital euro since 2021. It entered a preparation phase in late 2023. The goal is a form of public money that works in shops and online, much like cash and cards do today. The currency would be issued by the ECB and distributed by banks and payment providers.
Supporters say a digital euro could offer a safe payment option in a crisis and keep Europe competitive. Critics worry about data collection and the effect on deposits. The offline debate reflects these concerns. Offline payments promise cash-like privacy and resilience in outages. Online functions add reach, automation, and cross-border ease.
Online Versus Offline: The Trade-Offs
Parliamentarians who pushed for an offline-first model stressed privacy and inclusion. Offline tools can work without a signal and can support people without stable internet access. They may also reduce the risk of central tracking if designed with strict safeguards.
The Council’s broader approach adds online features from the start. That could make the system more useful for e-commerce and public services. It could also help merchants by offering instant settlement and fewer middlemen.
- Offline use aims for cash-like privacy and outage resilience.
- Online use enables remote payments and e-commerce integration.
- Consumer protections and fraud controls must work in both modes.
Privacy, Banks, and the Economy
Privacy is the main fault line. Civil society groups want minimal data collection, strict purpose limits, and no commercial profiling. Central bankers have proposed strong privacy by design and offline options with local storage of keys and balances. They have also said the state should not see people’s shopping habits.
Banks fear deposit flight if customers shift money into a central bank wallet. To ease this risk, officials have floated holding limits. Figures discussed by policymakers and researchers have ranged around a few thousand euros per person. Such caps could protect bank funding while keeping the digital euro useful for daily spending.
Merchants also care about fees and rules. If costs are low and acceptance is simple, usage could grow. If it adds friction, they may resist. Consumer groups want free basic use, strong fraud refunds, and no exclusion for people without smartphones.
How the Law Will Take Shape
The Council’s position heads into three-way talks with Parliament and the Commission. These talks, known as trilogues, will decide scope, privacy safeguards, business rules, and the role of intermediaries. Technical standards will likely involve the ECB, national central banks, and industry bodies.
The ECB has said any launch would follow only after lawmakers pass a legal framework and after testing. Europe will watch lessons from other projects, such as Brazil’s Pix, India’s UPI, and trials of offline features in several countries. While those are not digital cash from a central bank in the euro area, they show how instant payments can scale.
What Comes Next
Key questions remain. How private will offline payments be? How strict will holding limits become? Will merchants be required to accept the digital euro? The Council’s choice to include both modes puts these issues on the table now, rather than later.
The decision sets a faster path for a tool that could sit alongside cash and cards. If lawmakers can balance privacy, stability, and utility, a digital euro could reach pilot use in the coming years. If they cannot, the project could slow or shrink in scope.
For now, the message from governments is clear: a future digital euro should work online and offline. The details will decide whether people trust it, businesses accept it, and banks can support it without disruption.
