European Parliament Backs Digital Euro With Online and Offline Payments

The European Union has moved a step closer to issuing a digital version of its common currency after the European Parliament backed a proposal to allow a future digital euro to function both online and offline, according to a report by Reuters. The vote aligns the Parliament with the position already agreed by EU member states, removing one of the final political obstacles to establishing a legal framework for a central bank digital currency across the bloc.

The decision marks a notable moment of convergence in Brussels, where debates around digital money have often exposed tensions between national governments, lawmakers, banks, and privacy advocates. With the Parliament now endorsing the same negotiating stance as the Council, EU institutions are broadly unified on the core design principles of the digital euro, including its availability for everyday payments in both connected and disconnected environments.

The digital euro has been under discussion for several years, following concerns that cash usage is declining across parts of Europe while digital payments are increasingly dominated by non-European providers. The European Central Bank launched a formal investigation phase in 2021 to assess whether a retail central bank digital currency could complement physical cash rather than replace it.

Earlier legislative discussions in the European Parliament had raised the possibility of restricting the digital euro largely to offline use, partly in response to privacy concerns. Lawmakers worried that a fully online digital currency could enable excessive transaction monitoring or blur the line between public money and private payment platforms. Tuesday’s vote signals a shift away from that more cautious stance, reflecting an acknowledgement that modern payment systems require online functionality to be viable at scale.

Under the current proposal, the digital euro would allow users to make online payments similar to existing electronic transactions, while also supporting offline payments that would continue to work without an internet connection. EU officials have repeatedly emphasized that offline transactions would offer a level of privacy comparable to cash, with transaction details stored locally on users’ devices rather than recorded centrally.

Supporters of the project argue that this dual structure is essential to ensuring the digital euro is resilient, inclusive, and trusted. Offline capability is seen as particularly important in emergencies, rural areas, or situations where network access is disrupted. At the same time, online functionality would enable seamless integration with e-commerce, peer-to-peer payments, and digital public services.

Beyond consumer convenience, the digital euro is increasingly framed as a strategic project for Europe’s financial sovereignty. Policymakers have warned that the continent’s growing dependence on foreign-owned payment networks and technology platforms could expose critical financial infrastructure to external risks. By offering a public, euro-denominated digital payment option backed by the central bank, EU leaders aim to reduce reliance on private intermediaries headquartered outside the bloc.

The initiative also sits against the backdrop of rapid growth in cryptocurrencies and stablecoins, some of which have been promoted as alternatives to traditional fiat currencies for digital payments. Within Europe’s financial policy debates, questions have emerged over whether widespread use of privately issued digital tokens could shift deposits away from commercial banks and complicate the functioning of monetary policy.

Banking industry groups have expressed concern that a digital euro could disrupt existing financial models, particularly if consumers shift large portions of their deposits into central bank-issued wallets. In response, EU policymakers and the ECB have stressed that the digital euro would be distributed through banks and payment service providers rather than directly by the central bank, and that limits would be placed on how much individuals can hold.

These safeguards are intended to preserve the role of commercial banks while ensuring that citizens continue to have access to central bank money in an increasingly digital economy. Officials have also highlighted the potential for innovation, arguing that a digital euro could provide a common foundation on which European payment providers and fintech firms can build new services.

Consumer groups and civil society organizations continue to monitor the project closely, particularly around issues of privacy, accessibility, and data protection. The ECB has said it will consult widely with stakeholders as the design phase progresses, including merchants, payment providers, and consumer advocates.

With political alignment now largely in place, attention turns to the legislative process required to formally authorize the digital euro. If EU lawmakers pass the necessary regulations in the coming months, the ECB has indicated that technical testing could begin in 2027, with a potential rollout later in the decade.