Digital Euro: Frequently Asked Questions

• Political momentum behind the digital euro, a central bank digital currency (CBDC) is building, making a parliamentary majority vote in favor of its introduction increasingly likely.
• Negotiations between the European Parliament, the European Council and the European Commission are likely to include additional compromises around the CBDC's online and offline functionalities, interoperability with existing payment systems, and safeguards for cash usage.
• Deposit competition and outflows pose the main risks for banking sectors from the digital euro. 
• The CBDC's lack of interest remuneration, holding limits, a gradual rollout, and restrictions on its use for non-euro area households are likely to limit adverse implications for EU banking sectors from future introduction of the digital euro.
• Limitations on the size and circulation of the digital euro make it insufficient to mitigate the potential replacement of euro-denominated international financial transfers with US dollar-denominated digital deposit and stablecoin-based payments. 

The digital euro is the European Union’s central bank digital currency (CBDC), issued by the European Central Bank (ECB) for circulation in the euro area to adapt to evolving consumer preferences for digital payment.

According to the ECB, nearly two-thirds of eurozone card transactions are processed by non-European companies and 13 member states rely entirely on international card schemes for in-store payments. Through dedicated accounts, or digital wallets, anyone in the euro area will be able to use digital euros online and offline to make person-to-person transfers and point-of-sale purchases.

A €3,000–4,000 limit is proposed for individual holdings in digital euro wallets, alongside another proposal to link users’ bank accounts with their digital euro account for easy top-up. 

Benefits of a digital euro include:

• Supports consumers’ shift toward digital payments and away from cash
• Encourages payments innovation and infrastructure upgrades to accommodate digital deposits and tokenized payments
• Strengthens European strategic autonomy and sovereignty in payments, as almost two-thirds of eurozone card transactions are processed by non-European companies

Risks of a digital euro include:

• Bank deposit outflows and stronger deposit competition, since households could shift cash-like savings into a CBDC perceived as safer
• Faster “digital-run” dynamics in periods of stress, given the low‑friction, near‑instant convertibility of the digital euro
• Cross-border and non-euro area EU vulnerabilities, such as the digital euro becoming an alternative destination for households’ foreign-currency (often euro-denominated) savings

Steps taken to mitigate risks of a digital euro include: 

• No interest remuneration
• Proposed holding limits (€3,000–€4,000)
• A gradual rollout
• Restricted access for non-euro area households 

On May 5, 2026, the European Parliament’s Committee on Economic and Monetary Affairs (ECON) is scheduled to vote on the ECB’s proposals to establish a legal framework to launch the digital euro.

The European Council approved these legislative proposals in December 2025, while final approval by the European Parliament would reflect any refinements introduced in the upcoming ECON vote. The ECB aims to start issuing the digital euro in 2029, preceded by a pilot run in 2027.

Following negotiated concessions on key design issues — most notably privacy safeguards and measures to mitigate the impact on the banking sector from deposit withdrawals — a parliamentary majority in favor of the digital euro is increasingly likely. While further delays and some dilution of the original design remain quite likely, the most probable outcome is now a phased implementation, with operational readiness to be reached around 2029–30.  

The digital euro is not intended to replace cash. Instead, it is designed to complement existing payment methods and adapt to evolving consumer preferences for digital payments.

The digital euro will be usable both online and offline, but safeguards for cash usage are a key part of the legislative negotiations, ensuring that cash remains available and protected even as the digital euro is introduced.

The digital euro aims to modernize payments, reinforce EU sovereignty, and offer a safe digital alternative to cash, while carefully managing risks to financial stability and the banking sector through design features like holding limits and phased rollout. 

Overall, the digital euro is positioned as a forward-looking initiative to adapt to evolving payment preferences while safeguarding the resilience of the European financial system.

—With contributions from Louise Alestam

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.