Could the digital euro be a reality within four years? There is certainly momentum building, even if consumers remain sceptical.
The motivation reflects the growing digitalisation of payments, but also a deeper concern about European dependence on US giants Visa and Mastercard given the unpredictability - not to say economic hostility - of the Trump administration.
"The digital euro, to keep it as simple as possible, is digital cash," ECB president Christine Lagarde told a European Parliament committee on 7 October, "and cash is the remit of the [European] central bank. The anchor of our currency is central bank money. If the world is going digital, central bank money should go digital".
The idea is that the digital euro will be as close to cash as possible, and that cash is actually European Central Bank money.
But questions remain about how it will operate, how costly, what are the privacy concerns and what impact it could have on the liquidity of commercial banks.
The scale will be enormous.
"Every citizen across the whole of Europe will be able to use this, and every merchant, every shop, either in-store, bricks and mortar, or online, will have to accept this," says Gillian Byrne, head of payments at Banking & Payments Federation Ireland (BFPI), "Every bank and regulated service provider will have to distribute it. We haven't done anything like this before."
Between 2019 and 2024 the share of cash used at physical points of sale in the euro area fell from 72% to 52% in terms of volume, and from 47% to 39% in terms of value.
The ECB began internal explorations in 2021, and the European Commission published a draft proposal in June 2023. This week, the ECB began the second phase of preparation with a view to the creation within several years of a digital euro wallet offering consumers secure, instant physical and online payments - and between individuals - irrespective of which eurozone country they are in.
The digital euro wallet would be set up via a bank or post office and then charged with cash linked to an existing bank account.
Many eurozone members have their own national digital payments system, but none work across the euro area.
Why the need for a digital euro?
However, if so many people make contactless payments via Apple Pay or Google Pay, which are linked to credit or bank cards, why is there a need for a digital euro?
The difference, says the ECB, is that the cash on your digital euro wallet is ECB cash, and not mediated by commercial banks or American-owned credit cards.
This is one of the potential pitfalls: could bank deposits themselves be at risk if the digital euro wallet becomes a safe haven, and if so, how will the authorities set a limit to the amount of cash you can hold?
MEPs and member states asked the ECB to simulate a scenario in which consumers shifted their money from banks in a crisis situation to their digital euro wallet, based on a limit of €3,000 per user.
The simulation, published last week, suggested that in an extreme scenario, where every one of the eurozone’s 2,025 banks was under pressure, some €700 billion could flow out of banks and into digital wallets.
Some 13 smaller banks could see their cash buffers, as required by post-financial crisis rules, depleted and could go under.
Markus Ferber, a German centre-right MEP and member of the European Parliament’s economic and monetary affairs committee, warned of the risk, saying that "in a digital age, bank runs happen much quicker and much more forcefully than before. So, there is good reason to be extra cautious".
The ECB counters that such a scenario is highly unlikely, pointing out that €700 billion would represent just 8.2% of all retail deposits, and that the scenario would require every single eurozone consumer to move the maximum from a bank deposit into their digital wallet.
"The holding limit is important," says a senior eurozone source, "because it’s trying to get the balance right between this being a usable technology and making sure that it's not depriving commercial banks of their ability to have deposits and then use those deposits for the real economy".
Control of the holding limit
At an informal meeting in Copenhagen last month, eurozone finance ministers agreed a roadmap for its adoption, with the proviso that ministers will be in a position to control what the holding limit is when the final product is rolled out.
The Danish presidency of the EU is confident that member states will agree a negotiating position by the end of this year, with the European Parliament adopting its position by next summer.
That means the final deal could happen during the Irish presidency in the second half of next year.
Undoubtedly, Donald Trump’s return to the White House has added a sense of urgency to the cause, with a digital euro becoming yet another touchstone of future European independence - alongside security - from a less predictable United States.
One ECB source points out that when Russia invaded Ukraine, Visa and Mastercard pulled their services overnight from the Russian Federation.
Even if far-fetched, should a future MAGA-style president put pressure on Visa and Mastercard to limit their use in Europe, then 13 out of 20 eurozone countries would be unable to operate basic electronic payments because they rely on the two US credit card giants to do so.
If the ECB doesn't develop a digital euro, somebody in the private sector will develop one
Another argument is that the digital euro is a purely defensive move by the ECB to counter the rise of so-called stablecoins.
These are digital currencies whose value is linked to stable assets in order to avoid price fluctuations. In contrast to the more volatile bitcoin, the so-called fiat-backed stablecoin maintains a constant value by being pegged to a traditional currency like the US dollar.
President Trump has recently relaxed regulations around stablecoins and global issuance now stands at nearly $300 billion.
"The thing for Europe is that if the ECB doesn't develop a digital euro, somebody in the private sector will develop one," explains Rebecca Christie, senior fellow at the Bruegel think-tank.
"They'll develop what's called a stablecoin, which is a one-to-one copy of a regular currency. The main difference between a stablecoin and a real currency is the central bank."
In other words, while the US dollar is the world’s main reserve currency, if a dollar-based stablecoin gets into trouble, there’s no real problem. However, if a euro-based stablecoin gets into trouble, there is a reputational hit to the single currency which could be destabilising.
"If somebody makes an imitation euro," says Christie, "and there's a financial crisis with it, maybe even outside Europe, the ECB doesn't have any way to control that, because it's a private sector initiative. That makes the whole euro look bad and you could have a situation where people don't want to buy euro again."
In other words, by driving ahead with the digital euro, the ECB is attempting to offset that risk.
"The ECB isn't marketing it like that because they think that that's a negative story, and a hard story to tell, so they're marketing it as a payments revolution," says Christie.
In June, Christine Lagarde in June told MEPs that privately issued stablecoins posed risks for monetary policy and financial stability and urged MEPs instead to back legislation for the digital euro.
That means pushing selling points.
One is that the digital euro will still be usable if there is poor internet or data coverage (ie, when consumers are offline).
During the Iberian blackout in April this year, when digital payments failed, consumer spending fell by 42% across affected areas, and e-commerce across Spain fell by 54%.
"This event transformed cash from one payment option among many into the only means of payment for many of those who held it or could access it, as existing banknotes remained perfectly functional even when digital systems and many ATMs were inoperable," according to a note in the ECB’s economic bulletin.
According to the offline option, a consumer will still be able to use the digital euro offline through the straightforward "near field communication", or NFC, between two digital devices (they will, of course, need to be fully charged).
However, when the digital euro is used online, then that’s when privacy questions have arisen.
A balance between privacy and safety has to be struck
According to a European Parliament research note, "online, every payment is visible to the intermediary and the central bank, even if the central bank does not know the identity of the users. The intermediaries [ie, the bank to which the consumer is connected] however do".
Again, officials say this is where a balance between privacy and safety has to be struck: online digital euro exchanges will, in theory, be subject to anti-money laundering and counter-terrorism safeguards, although at an early stage the ECB argued that legislators should relax anti-money laundering rules when it came to low-value digital euro payments so that they could enjoy more privacy than commercial bank euro payments.
Christine Lagarde, the ECB president, told the European Parliament that the way the digital euro is created will have to "navigate between these two imperatives: number one, making sure there is no money laundering, no financing of terrorism, and that the customer origin is well known. And number two, protecting the privacy of citizens.
"The promise is that the digital euro will be almost as private as banknotes - not quite, but almost as private as banknotes."
One senior eurozone source acknowledges there have been concerns about the ECB knowing what consumers spend their money on.
"The ECB won't be able to control your spending," says the source. "The money is not programmable, yet Google, Visa, MasterCard, Apple - they see everything you spend your money on. It’s not as easy in the EU, but in other countries, they'll sell the data on what you buy and sell."
Would Irish consumers take to the idea?
Ireland is certainly in love with small-scale digital payments, as reflected in the huge popularity of Revolut (over three million customers by the end of last year).
According to the BPFI payment monitor in September, some 60% of contactless payments in Irish shops, restaurants and other retail outlets were made using digital wallets rather than cards in the first half of 2025, with over 1.6 billion such payments in the twelve months to June 2025, valued at €28.3 billion.
More than half of all contactless payments are now made using mobile wallets such as Apple Pay or Google Pay, rather than cards.
However, Irish consumers remain to be convinced about the digital euro.
Some 23% said that they did not plan to use the digital euro and 14% said they didn’t know how much digital euro they expected to hold, according to the BPFI report.
"Irish consumers just want a quick, frictionless experience and don’t necessarily mind what the technology in the background is, so long as it’s trusted, reliable, frictionless and cost efficient for them or free," says the BPFI’s Gillian Byrne.
"There's definitely going to be a learning curve, and not just for consumers but for business, for banks, for everyone."
Acclimatising consumers and retail outlets to the benefits of the digital euro will be indispensable to its success - the more it’s accepted, the more familiar people will become with it, and the more widely used it will be; the opposite will also be true.
If the holding limit stays at €3,000, that might seem a small limit compared to a Visa card. However, the point is that it is supposed to be treated as cash.
The ECB and European Commission insist its basic functions will be free to use, while the Commission has suggested that merchants - even small retailers - who accept commercial card payments should be obliged to also accept the digital euro.
How a digital euro app will look and what kind of network will be required to link consumers, banks and retailers using the new method are all to be figured out, and this will have an impact on the cost.
A PwC study suggested the cost could be up to €2 billion per bank, and up to €18 billion across the whole eurozone, limiting innovation in the banking sector and ensuring high running costs.
The ECB this month strongly disputed this prediction, suggesting the cost could be between €4 billion to €5.77 billion in total, or €1 billion to €1.44 billion annually over a four-year period. This estimate, says the ECB, is similar to the European Commission’s prediction, and those of some national banks.
The Irish Government is strongly in favour of the digital euro. Paschal Donohoe, the Minister for Finance and chair of the eurogroup of eurozone finance ministers, said in Copenhagen that "the digital future of the euro is an essential part of its future. We are all now very conscious of public understanding and trust with regard to this project".
That trust and understanding will also have to extend to retailers and banks.
