The European Council issued a statement today (19th) announcing its formal agreement on the negotiating position regarding the digital euro. This signifies that the governments of the 27 EU member states have reached a formal consensus on the legislative framework for the digital euro. It is worth noting that this position is part of the "single currency package" and also includes proposals to strengthen the legal tender status of the euro cash, marking a significant step forward for the EU in the digital transformation of its public currency.
Digital euros coexist with cash
The position adopted by the Council mainly includes two norms: first, to establish a legal framework for the potential issuance of a digital euro, and second, to ensure the continued widespread acceptance and availability of cash within the EU.
The announcement states that the digital euro will serve as a supplement to cash, directly backed by the European Central Bank (ECB), providing individuals and businesses with a public option to make payments anytime, anywhere within the Eurozone. The system supports both online and offline use, emphasizes a high level of privacy protection, and will coexist with existing private payment tools (such as credit cards and mobile payment apps) without replacing them.
To maintain financial stability, the Council has set a cap on the total amount of euros held by the public, with the ECB responsible for setting the specific limits, subject to an overall cap reviewed by the Council every two years. Furthermore, payment service providers are prohibited from charging consumers for mandatory services such as account opening, account closing, and basic payment transactions; they may only charge for value-added services at their discretion. During the transition period, merchant-related fees will also be capped, after which they will be based on actual costs.
Regarding cash, the Council emphasized that euro cash remains the sole legal tender in the Eurozone and, in principle, must be widely accepted for payment of goods and services and for debt settlement. The position leans towards prohibiting retailers or service providers from refusing cash without justifiable cause, allowing only a few exceptions, such as online shopping or vending machines. At the same time, Member States must monitor cash acceptance, ensure access to cash for the public, and develop cash resilience contingency plans in the event of large-scale disruptions to electronic payments.
The digital euro plan takes another step forward
The digital euro project has been in preparation for years, since the European Central Bank (ECB) launched its investigation phase in 2021. However, on December 18th, ECB President Christine Lagarde announced at her final press conference of the year that the core system development for the digital euro was complete, with only the European Council and Parliament needing to approve legislation. If the timeline is met, the Eurozone will see both an official CBDC and privately-owned stablecoins operating in parallel in the second half of 2026.
EU officials generally believe this development is an important signal of the EU's strengthening of strategic autonomy in the payments sector, especially given the current heavy reliance of digital payments on non-EU infrastructure. European Central Bank President Christine Lagarde and other officials have repeatedly emphasized that the digital euro will enhance European monetary sovereignty, the resilience of the payments system, and economic security, while reiterating that cash will not be replaced but will coexist with digital forms, giving people more payment options.
The next step will be for the European Council to engage in trilogue negotiations with the European Parliament to expedite the legislative process. Once passed, this will lay a solid legal foundation for the future formal issuance of the digit euro.
