EU Council Backs Online and Offline Digital Euros

The EU Council has reportedly endorsed a new negotiating position for a digital euro.

The council is now supporting the idea of a version of the central bank digital currency (CBDC) that includes online and offline functionality, Reuters reported Friday (Dec. 19).

As the report noted, this diverges from past proposals by the European Parliament focused solely on offline usage. Under this new regime, the digital euro would be publicly issued by the European Central Bank and be available for users connected to the internet or offline.

Fernando Navarrete, the European Parliament pointperson for the digital euro, had lobbied for an offline-only version to uphold user privacy and the resilience of the coin itself.

Online transactions would involve immediate processing via the central bank’s ledger or through permitted intermediaries, while offline transactions can be recorded locally and synchronized later with the central ledger once connectivity resumes, the report added. That means the system can be used even in places with poor connectivity while still offering users “cash-like privacy,” Reuters said.

The report goes on to say that the ECB hopes the digital euro can help modernize its payment system and keep central bank money relevant as the world becomes more digital.

As cash usage wanes, a CBDC would help maintain monetary sovereignty and trust in the currency, Reuters said. However, the project — which the EU is set to test in 2027 — has faced pushback from the banking industry.

Last month, the 14 banks behind the Euro-centric digital wallet Wero issued a statement warning that a digital euro could subvert private-sector payment systems.

“The current design of the retail digital euro largely addresses the same use cases as private solutions, without offering any clear added value for consumers,” the banks said.

Meanwhile, PYMNTS wrote earlier this year about the U.S. Federal Reserve’s progress on developing a CDBC, arguing that compared to places like China and the EU, “the Fed’s progress has been cautious, bordering on passive.”

The central bank has made no binding commitments to develop or pilot a retail CBDC. Fed Chair Jerome Powell has consistently said such a move would need clear support from the executive branch and congressional authorization.

At the moment, the report added, “the political momentum favors stablecoins, not central banks.” A U.S. CBDC, PYMNTS wrote “would represent a public alternative to the privately issued stablecoin solutions promoted by the crypto industry.”