Background:

Cash is the only means of payment that allows direct in-person payments, with immediate settlement and without involvement of any third party or use of electronic equipment. In order to respond to the increasing demand for safe and trusted electronic payments, in 2021 the ECB launch an investigation phase into a central bank digital currency in Europe. Such a digital euro can be understood as central bank money offered in digital form for use by citizens and businesses for their retail payments.

Legislative Proposal:

Eventually, it is the ECB´s prerogative to decide whether or not to issue a digital euro. But such decision requires the approval of a regulation establishing a legal framework for a digital euro. Thus, on 28 June 2023 the European Commission put forward a digital euro package. 

The digital euro package would establish a new, digital form of central bank money, alongside euro banknotes and coins. The purpose of this legislation is to regulate the main aspects of a digital euro in order to ensure the same rules and conditions are applied throughout the euro area when using the digital euro.

European Central Bank work on the Digital Euro

On 18 October 2023, the ECB decided to advance to the next stage of the digital euro project by launching the preparation phase, following the completion of a two-year investigation into its potential design and distribution. Throughout this phase, the ECB published three progress reports and a closing progress report on the preparation phase. 

In October 2025, the European Central Bank concluded the preparation phase of the digital euro project. During this phase, the ECB refined the practical design of the digital euro by advancing work on the scheme rulebook, selecting providers for key components and services, operating an innovation platform, and analysing how the digital euro would integrate into the broader payments ecosystem. The ECB also recently provided the co-legislators with estimates of investment costs for the euro-area banking sector as well as technical input on the digital euro’s potential financial-stability implications. On the same day the preparation phase was completed, the ECB additionally released a report detailing the needs and expectations of citizens and merchants.

European Parliament works on the Digital Euro

The proposal was referred in the European Parliament to the Committee on Economic and Monetary Affairs (ECON). Stefan Berger from the EPP has been nominated as Rapporteur.

On 9 February 2024, former rapporteur Berger tabled his draft report, for which amendments were tabled on 21 February. The LIBE committee provided its opinion on this legislative file. No vote on this draft report has taken place. In December 2024 rapporteur Berger stepped down. In his stead, the new rapporteur Fernando Navarrete Rojas succeeded him.

The draft report prepared by MEP Navarrete was presented to the ECON Committee on 5 November, with the deadline for submitting amendments set for 12 December. 

The rapporteur’s draft report introduces several departures from the Commission’s original proposal.

First, the draft introduces a clear distinction between an offline and an online digital euro. The offline digital euro, a tokenised version of cash operating through device-to-device payments, would be established immediately, guaranteeing privacy, resilience, and universal accessibility even during network disruptions or crises. In contrast, the online digital euro, an account-based system relying on ECB-operated settlement infrastructure, would only be introduced if the Commission, after the ECB’s investigatory phase, determines that no suitable pan-European sovereign retail payment solution exists.

Second, the draft places stronger emphasis on privacy by proposing that the offline digital euro take the form of a tokenised version of cash, enabling device-to-device payments without settlement on the ECB ledger. This design is intended to replicate the privacy characteristics of physical cash more closely than the Commission’s approach, while allowing for separate AML/CTF-related limits for the offline instrument.

Third, the rapporteur introduces a more prescriptive framework for holding limits. Instead of granting the ECB broad discretion, the draft requires the Commission to set holding ceilings via delegated acts, drawing on an ECB report assessing financial-stability implications at euro-area, Member-State and individual bank level (assuming full uptake). Downward revisions could be made through delegated acts, while upward revisions would require a full legislative proposal. Additional limits could be adopted at the ECB’s request to protect financial stability, and the Commission could impose extra caps on offline holdings for AML/CTF reasons. 

Beyond these core differences, the draft report also adjusts the compensation framework, clarifying the fee and charge structure and introducing a ten-year review clause that would allow a shift to a cost-based model if this proves more efficient.

Negotiations in the ECON committee on amendments to the draft report are on-going.

Council work the Digital Euro

In December 2025, the Council adopted its negotiating position on the digital euro package, setting out a coherent framework for both digital and physical public money. On the digital euro, it supports the introduction of an ECB-backed public means of payment that would complement cash and private solutions and function both online and offline, while embedding strong safeguards for financial stability, consumer protection and market fairness. These include ECB-set holding limits within a Council-defined ceiling, free basic services for users, regulated fees for additional services, guaranteed fair access to mobile devices for payment providers, and a clear compensation regime with capped fees during a transitional period followed by cost-based pricing. 

References:

• European Parliament 'Establishment of the digital euro', 2023/0212(COD), 28.06.2023
• European Parliament 'DRAFT REPORT on the proposal for a regulation of the European Parliament and of the Council on the establishment of the digital euro, 2023/0212(COD), 03/11/2025. 
• European Commission 'Proposal for a Regulation of the European Parliament and of the Council on the establishment of the digital euro' COM/2023/369, 28.06.2023
• European Parliament, Committee on Economic and Monetary Affairs draft report on the proposal for a regulation of the European Parliament and of the Council on the establishment of the digital euro, 2023/0212(COD). 
• European Commission 'Impact Assessment Report' SWD(2023) 233, 28.06.2023
• European Commission, 'Proposal for a digital euro for the EU', Have you Say portal.
• European Central Bank, Progress on the preparation phase of a digital euro - First progress report, June 2024. 

Further reading:

• EPRS, Digital Euro package, Legislation in progress briefing, September 2023.
• Spitzer, K. G. and Loi, G., Digital Euro Reviewing the progress to date and some open questions (May 2023), DG IPOL, Economic Governance and EMU Scrutiny Unit, European Parliament, 2023.

Author: Martin Höflmayr, Members' Research Service, legislative-train@europarl.europa.eu