A breakthrough was reached today on the institutional framework for the digital euro, paving the way for the creation of a European digital currency designed to counter the dominance of U.S. payment systems such as Visa and Mastercard.
The decision came during the informal Eurogroup meeting in Copenhagen, attended by ECB President Christine Lagarde, Economic Commissioner Valdis Dombrovskis, and Eurogroup President Paschal Donohoe. All three stressed that “the digital euro is not just a means of payment, but also a political statement of Europe’s economic sovereignty.”
A compromise to safeguard financial stability
The compromise agreed foresees that before the ECB makes a final decision on issuing the digital euro, the matter will be discussed and approved by the ECOFIN Council. This is seen as crucial to address concerns that the digital euro could destabilise bank deposits by triggering large-scale withdrawals.
At the same time, ministers agreed on a mechanism to set a maximum holding limit per citizen, although no details were announced after the meeting.
“We are striking a balance that respects the competences of each institution - the ECB, the Commission and the Council,” Donohoe said, adding: “This proves our determination to move forward with this critical project.”
Timetable and European context
The ECB launched the digital euro initiative in 2021, and the Commission tabled a legislative proposal in June 2023, but Parliament and Council have yet to complete the approval process.
The initiative now comes to the fore amid Europe’s wider push to reduce dependence on third countries in critical areas such as energy and defence, with financial infrastructure part of this broader strategy.
The Council aims to finalise its part by the end of 2025, while the ECB hopes to have legislation in place by June 2026. Implementation would then take 2.5 to 3 years, meaning the digital euro is unlikely before 2029.
Lagarde underlined that “the digital euro is not only a payments tool, but also a political statement about Europe’s sovereignty and its ability to manage payments, including cross-border, through European infrastructure.”
Bankers and MEPs remain wary that the digital euro could allow greater state surveillance of transactions, while there are also fears of mass transfers of deposits from banks into the digital currency. Both Lagarde and Donohoe stressed that “public trust is critical,” which is why the process is advancing cautiously.
Bulgaria welcomed as observer
At the Copenhagen meeting, 21 ministers were present, with Bulgaria joining as an observer ahead of its planned entry into the eurozone on 1 January 2026.
“We welcome Bulgaria’s preparations to become a full member of the euro area,” Donohoe said. The Eurogroup also discussed its work programme through June 2026, which includes priorities such as budget coordination, deepening the capital markets union, and strengthening the international role of the euro.
At the October Eurogroup and ECOFIN meetings in Luxembourg, the Copenhagen decisions are expected to be formally ratified. Discussions will also continue on the digital euro and on shaping EU economic policy in the run-up to 2026.
CNA sourced reporting
