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European Union Reaches Landmark Agreement on Digital Euro Framework

By  |  December 21, 2025

European Union governments have agreed on a shared position on the creation of a digital euro, a step that advances the bloc’s efforts to strengthen its monetary independence and safeguard the global standing of the single currency. The agreement marks a key political milestone after years of debate and comes amid growing concern in Europe about reliance on US-based payment providers and the rise of dollar-linked stablecoins, according to Bloomberg.

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    The consensus was announced under Denmark’s rotating presidency of the EU Council. Danish Economy Minister Stephanie Lose said the initiative would bolster Europe’s payments landscape and economic resilience. “The digital euro is an important step toward a more robust and competitive European payment system, and can contribute to Europe’s strategic autonomy and economic security, as well as a strengthened international role for the euro,” Lose said Friday in a statement published by the Council. Per Bloomberg, EU officials increasingly see the project as a strategic response to external pressures in global finance.

    Under the agreed negotiating mandate, EU governments insist that the digital euro must be available in both online and offline forms from its initial rollout. The Council said that “both its online and offline functional modalities are necessary and essential and both should therefore be available from the first issuance of the digital euro.” This position aligns closely with the European Central Bank’s long-standing view that offline functionality is crucial for resilience and financial inclusion, according to Bloomberg.

    The stance, however, diverges from proposals made by Fernando Navarrete, a leading lawmaker from the center-right European People’s Party. In a report published in October, Navarrete suggested that an offline version should only be introduced if private companies fail to deliver an adequate solution. The ECB has rejected that idea, arguing that limiting the scope would undermine the benefits of a central bank digital currency, per Bloomberg.

    Related: EU’s Digital Services Act Moves from Reports to Penalties as Platforms File Risk Disclosures 

    The digital euro project was launched by the ECB in 2021, but progress has depended heavily on political agreement. The European Commission put forward draft legislation in 2023, yet it took more than two years for member states to settle on a common approach. The next step is for the European Parliament to finalize its own position, after which formal negotiations with the Council can begin. If lawmakers and national governments reach a deal next year, the ECB could start a pilot phase in 2027, with a potential public launch around 2029, according to Bloomberg.

    Concerns about financial stability also shaped the agreement. Governments emphasized the need for limits on how much digital euro individuals can hold, a measure aimed at preventing large-scale shifts out of bank deposits. Euro-area finance ministers had already agreed earlier this year on principles for setting those caps, relying on close coordination between the ECB and the Council, Bloomberg reported.

    The Council’s statement also addressed how payment service providers would be compensated. “During a transitional period of at least five years, interchange and merchant service charges will be capped at a level based on fees for comparable means of payments,” it said. “After the transitional period, fee caps will be set based on the actual costs associated with the digital euro.” According to Bloomberg, these provisions are intended to encourage adoption while avoiding excessive costs for merchants and consumers.

    Source: Bloomberg