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The Council of the European Union approved a framework for the digital euro this week that would enable both internet-connected and offline transactions, while imposing holding limits to prevent large-scale deposit flight from commercial banks.
The move, adopted this week by the Council of the European Union, sets out the bloc’s common position on how the proposed currency should work, who should control it, and how it should coexist with cash.
At the core of the Council’s position is a dual-structure payment model for the Digital euro, allowing users to make transactions both online and offline from launch. Online payments would operate through existing digital infrastructure and authorized intermediaries such as banks and payment firms. Offline payments, by contrast, would allow transactions without an internet connection, syncing later once connectivity is restored.
According to the Council’s adopted text, “the digital euro would launch with both online and offline functionality,” underscoring a shift from earlier debates that emphasized offline use as a cash substitute. Policymakers now argue that offering both options together improves reliability while supporting privacy and resilience during outages or in low-connectivity regions.
Another central pillar of the Council’s proposal is the introduction of holding limits for the Digital euro, a measure designed to prevent large-scale movement of deposits out of commercial banks. Under the plan, the European Central Bank (ECB) would set caps on how much individuals could hold and review those limits periodically.
The Council noted that limits are intended to “prevent large shifts of deposits away from commercial banks while still enabling everyday payments,” reflecting long-standing concerns among policymakers about financial disintermediation.
For crypto investors and financial institutions alike, the approach signals that the Digital euro is being framed as a payment tool rather than a store of value.
By retaining the ECB’s authority over these caps, governments aim to preserve monetary transmission and reduce systemic risks as digital public money enters circulation.
Privacy and cost have remained sensitive issues throughout negotiations, and the Council addressed both directly. It supported a structure where basic Digital euro services would be free for users, with payment providers permitted to charge only for optional features under defined conditions.
The Council’s position also includes transitional caps on merchant and interchange fees. These caps would apply for several years after launch before aligning with actual processing costs. The aim, according to the Council, is to encourage merchant adoption without creating new payment monopolies tied to the Digital euro.
Crucially, governments linked progress on digital public money to stronger legal protections for cash. The Council called for clearer rules to ensure cash acceptance across the euro area, stating that “the digital euro is framed as a complement to cash, not a replacement.” Member states would also be required to monitor access to cash and prepare contingency plans for electronic payment disruptions.
Separately, European data protection authorities continue to assess whether an offline Digital euro can achieve privacy standards comparable to cash. Recent technical analysis suggests it is possible, though it would require careful cryptographic design and realistic security assumptions.
With the Council’s negotiating mandate now finalized, talks with the European Parliament will shape the final legal framework. The outcome will determine how the Digital euro balances privacy, resilience, and financial stability as Europe advances toward issuing its first form of public digital money.
