EU Digital Euro Rules Take Shape with Council Mandate

The Council of the European Union has adopted its negotiating position on the digital euro, endorsing a model that supports both online and offline payments. The proposal confirms that the digital euro would be issued by the European Central Bank and usable across the euro area at any time, regardless of internet connectivity. This approach marks a departure from earlier European Parliament proposals that favored an offline-only design focused on privacy and resilience.

Under the Council’s mandate, online digital euro transactions would be processed in real time via the ECB’s ledger or through authorized intermediaries, while offline payments could be stored locally and synchronized later. Offline functionality is intended to ensure continuity during connectivity disruptions and to preserve cash-like privacy features. At the same time, online access would allow the digital euro to support a wider range of digital payment use cases.

To mitigate financial stability risks, the Council proposes limits on individual digital euro holdings to prevent excessive migration of deposits from commercial banks. These holding caps would be set by the ECB and reviewed every two years. Basic digital euro services would have to be provided free of charge, while providers may charge fees for additional services. A transition period of at least five years would cap interchange and merchant fees at levels comparable to existing payment instruments, with later adjustments based on actual costs.

The Council’s position enables the start of interinstitutional negotiations with the European Parliament on the digital euro’s legal framework. Once adopted, the ECB would be able to move forward with issuance following a pilot phase planned for 2027. According to current ECB timelines, the digital euro could become operational by 2029, although the project continues to face political and banking sector concerns.