- The EU is advancing plans for a digital euro to boost financial autonomy.
- EU finance ministers are tackling challenges to implement the digital euro by 2025.
- Privacy, compensation, and non-euro country impacts are key concerns.
- ECB Vice-President Luis de Guindos stresses reducing reliance on US payment systems.
- The digital euro aims to enhance Europe’s financial sovereignty amidst global shifts.
The European Union is making significant progress towards establishing a digital euro, a move aimed at enhancing financial autonomy and reducing reliance on non-European payment systems. This initiative has gained momentum among EU finance ministers, who are working diligently to address the various challenges associated with its implementation. The urgency of this initiative was highlighted earlier this year when EU leaders urged finance ministers to expedite discussions on the digital euro’s legal framework. This call to action has been met with intensified negotiations within the Council of the EU, with the Danish presidency setting an ambitious goal of reaching a consensus by the end of 2025.
However, achieving this goal is not without its challenges. Several countries have expressed the need for further technical work before advancing this new payment method. Germany’s Lars Klingbeil emphasized the importance of addressing key issues during a July meeting of finance ministers in Brussels. “We have to find a fair compensation model and good distribution conditions for banks and, of course, we have to offer citizens a high level of privacy protection from day one,” he stated. Privacy and compensation for payment service providers are not the only sticking points. Ministers have also raised concerns about the impact on non-euro countries, the holding limit for the new currency, and the decision-making process regarding the project’s continuation.
Sweden has advocated for a system that does not impose undue burdens on banks outside the eurozone, while the Netherlands favors a low holding limit to ensure the digital euro is used primarily as a payment tool. Hungary, on the other hand, is demanding a say in the currency’s issuance. These diverse perspectives highlight the complexity of reaching a consensus on the digital euro’s framework.
Technological Considerations and Strategic Autonomy
At the start of July, European Central Bank (ECB) Vice-President Luis de Guindos emphasized that no decision on launching the digital euro would be made until the legal framework is ready. Both the Council and Parliament are actively working on this framework. Once the legislation is adopted, the ECB’s governing bodies will decide whether to proceed, triggering a preparatory phase of approximately two and a half years. De Guindos stressed the importance of collective action to strengthen Europe’s financial autonomy. “Accelerating progress on the digital euro is essential to reduce our growing dependence on the US, as most electronic payment solution providers are US firms,” he said. “Timely adoption of the legislation is therefore crucial in our view.”
Currently, 13 out of 20 eurozone countries lack a national card scheme and rely on international providers like Visa or Mastercard for digital payments. This reliance underscores the need for a digital euro to enhance Europe’s financial sovereignty. Adding to the urgency, the United States has recently approved the Genius Act, which oversees the stablecoin market. In April, the ECB’s Piero Cipollone expressed concerns about the US government’s promotion of dollar-backed stablecoins, which could pose risks to Europe’s financial stability and strategic autonomy. This makes the digital euro plans even more critical to protect and strengthen the single currency.
According to a Financial Times report, the ECB is considering operating the digital euro on a public blockchain such as Ethereum or Solana, rather than a private one. The ECB confirmed to Euronews that the Eurosystem is experimenting with various technologies, including centralized and decentralized options, in the development of the digital euro. However, no decision has been made yet.
Legislative Progress and Historical Context
Anna Martin, head of financial services at the European Consumer Organisation (BEUC), emphasized the importance of building the digital euro infrastructure in Europe by European providers. “Current geopolitical uncertainties show very clearly the necessity to reduce Europe’s dependency on non-European providers in strategic areas,” Martin told Euronews. Despite the urgency, the European Parliament, the other co-legislator, does not appear to be in a rush. On February 9, 2024, the former rapporteur on the file, Stefan Berger, tabled his draft report. Since then, no vote has been held on the draft, and in December 2024, Berger stepped down as lead MEP on the digital euro file. He was succeeded by Spain’s EPP MEP Fernando Navarrete, and on April 8, 2025, the ECB’s Piero Cipollone urged MEPs to make progress on the legislative file. Navarrete did not respond to Euronews’ request for comment regarding the halted process.
The digital euro initiative is not without historical parallels. The introduction of the euro itself in 1999 was a monumental step towards European integration, aimed at fostering economic stability and growth. Similarly, the digital euro seeks to enhance financial autonomy and reduce reliance on external payment systems. However, the challenges faced today, such as privacy concerns and the involvement of non-euro countries, echo the complexities encountered during the euro’s inception.
In conclusion, the push for a digital euro represents a significant step towards enhancing Europe’s financial sovereignty. While challenges remain, the commitment of EU finance ministers and the ECB to address these issues underscores the importance of this initiative. As the legal framework takes shape, the digital euro has the potential to transform the European financial landscape, providing a secure and efficient means of payment for citizens and businesses alike.