The digital euro should not be confused with standard bank account money. When using a bank card, Apple Pay or Google Pay, a person pays with physical money held in their account. With the digital euro, funds would instead be stored in a separate virtual wallet.
The European Central Bank first raised the idea in 2020, citing Europe's lack of its own payment infrastructure. The EU executive later made the formal proposal. The digital euro cannot come into existence without the rules underpinning it being approved by both EU member states and the European Parliament.
The ECB hopes the digital euro will be available to citizens by 2029, provided EU negotiators approve the governing rules by the end of this year. If that timeline holds, the ECB intends to launch a pilot programme in mid-2027 to test how the system would work in practice. Some argue that is too long a wait. However, Alessandro Giovannini, advisor to the digital euro director at the ECB, told AFP: "Banks and merchants need time to prepare so they can roll it out smoothly and at scale."
Digital euros would carry the same value as cash and banknotes. Users would need to open an account with a bank or a public institution such as a post office, transferring funds into it from another account or via a cash deposit. Payments could then be made in shops, online and between individuals, using a card, an app or a phone.
Officials stress the system would protect user privacy, with no possibility of identifying who carried out a transaction. An offline mode would offer a level of confidentiality equivalent to using physical cash.
"It wouldn't replace anything. Cash would still be available, and people could use existing private payment methods," Giovannini said. The digital euro would instead offer greater choice, allowing consumers to "preserve their freedom to choose how to pay as daily life becomes more digital," he added.
Payment systems are "not neutral" but "instruments of power," said centrist EU lawmaker Gilles Boyer. "We, Europeans, have had many wake-up calls about our dependence on the US. We're fully awake now, but we're not always acting," he said, adding that the vote would make "a sovereign, pan-European payment solution a reality."
EU officials frequently cite Washington's 2025 sanctions against International Criminal Court judges to illustrate the grip US firms hold over financial infrastructure. French judge Nicolas Guillou described losing access to his Visa card as a direct consequence.
The digital euro is "a chance to end a dependence we have lived with for too long." According to the ECB, nearly two-thirds of card payments in the euro area are processed by non-European companies, primarily Visa and Mastercard. Beyond that, 13 out of 21 eurozone countries have no national card scheme for everyday payments in shops or online stores.
Banks are the most vocal opponents, and their primary concern is cost. Adapting the banking system to accommodate the digital euro would amount to 18 billion euros ($20 billion), according to an April report by the European Banking Federation. The ECB puts its own estimate at between four and 5.8 billion euros in investment costs to the sector.
Banks also fear the consequences for their financial stability: if customers were to shift significant deposits into digital euros, bank deposit levels could fall sharply. The ECB dismisses this risk. "Thanks to its design that prevents large deposit outflows, the digital euro wouldn't cause these risks, even in extreme and unlikely crisis situations," Giovannini said.
European banks additionally worry about reduced demand for their own online services, and view the digital euro as a direct rival to Wero, the pan-European payment system.
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