digital Euro (d€)

Last updated: 11 September 2026

The digital euro is the planned digital form of central bank money for everyday use: it would be issued by the Eurosystem and distributed to individuals and businesses by banks and payment service providers. It is neither a cryptocurrency nor a stablecoin, and it is not a new currency – it is the same euro, in a form anyone can hold and pass on digitally. It will only be issued once European legislators have adopted the legal basis.

How it differs from what exists

Central bank money and commercial bank money

Anyone paying digitally today moves commercial bank money: the balance on a payment account is a claim on the account servicing bank. It is convenient and, in Europe, well protected – but it is a bank’s liability. Central bank money is available to private individuals in one form only: cash. That is where the digital euro comes in. It would be the second form of central bank money open to everyone – a claim on the central bank that survives the failure of the account servicing bank.

From this follows the point that matters most: the digital euro is designed as a complement to cash, not a replacement for it. The Commission tabled its digital euro proposal in June 2023 together with a second proposal that explicitly safeguards the legal tender status of cash and its acceptance. The two belong together. What drives the project is not the abolition of cash but the observation that, in an increasingly digital economy, fewer and fewer payments are settled in central bank money.

Retail and wholesale

Central bank money in digital form has existed for a long time – just not for end users. Banks hold balances in their accounts at the central bank and settle TARGET/T2 and TIPS payments through them. When the digital euro is discussed, the retail variant is always meant. The Eurosystem’s work on settling securities transactions using distributed ledger technology concerns the interbank layer and is a separate project.

Digital euro and instant payments

An SCT Inst credit transfer reaches the payee in seconds and is often equated with the digital euro. The difference is not speed but the money itself: SCT Inst transfers commercial bank money, which the banks subsequently settle in central bank money between themselves. With the digital euro the end user holds central bank money directly. On top of that comes uniform acceptance across the euro area – something today’s national card schemes such as the girocard do not provide.

Legal basis and timeline

The digital euro needs legislation. The European Commission tabled its proposal for a regulation in June 2023. The Council agreed its negotiating position in December 2025 and the European Parliament adopted its own in July 2026; trilogue negotiations have been under way since. Only once the regulation is in force can the Governing Council decide on issuance – a point the ECB states explicitly.

Technical preparation runs in parallel. The Eurosystem’s preparation phase started in November 2023 and was concluded at the end of 2025; since then the Eurosystem has been working on technical readiness in the next project phase. A twelve-month pilot is planned from the second half of 2027 with selected payment service providers, merchants and Eurosystem staff, followed – subject to the legislation and to a decision – by a possible first issuance during 2029. Every date beyond the pilot depends on the legislative process.

How it would work

The model has two tiers: the Eurosystem issues the digital euro and operates settlement, while the customer relationship stays with banks and payment service providers. They handle onboarding, provide the user interface, meet anti-money-laundering obligations and fit the digital euro into their existing offering. The user therefore has no contract with the central bank, but one with their familiar provider.

The settlement infrastructure is called the Digital Euro Service Platform (DESP). Its core and the issuance function sit with the Eurosystem itself; a consortium of national central banks, among them the Deutsche Bundesbank, is building clearing and settlement. Five further components were procured externally:

• Alias lookup – payments addressed by simple aliases instead of long account identifiers.
• Risk and fraud management – tools for payment service providers to detect suspicious payments.
• App and SDK – a Eurosystem application plus a toolkit for providers to integrate the functionality into their own apps.
• Offline solution – payments without connectivity, directly between two devices.
• Secure exchange of payment information – encryption of sensitive data on behalf of payment service providers.

For the user, the digital euro sits in a wallet – an application provided by their bank or payment service provider, either inside the familiar banking app or through the Eurosystem app. This is not the same as the EUDI Wallet and its German implementation d-you: those prove identity and hold no money. The two can work together – the identity wallet when opening the account, the payment wallet when paying – but they are two different things.

Two modes of operation follow from this. Online, every payment settles on the Eurosystem platform – in shops, online and person to person. Offline, the amount is transferred directly between the devices, for example over near-field communication, without any third party seeing the payment.

The link to the payment account is not an add-on; it is what makes the instrument usable. Users can fund and defund manually. Beyond that, the scheme provides for combined transactions: if the balance does not cover a payment, the shortfall is drawn from the payment account within the same transaction (reverse waterfall); if an incoming payment would exceed the holding limit, the surplus goes straight to the payment account (waterfall). For the user, the question of whether enough is “loaded” therefore disappears.

The business rules are set out in the Digital Euro Scheme Rulebook, drafted by the Rulebook Development Group with market participation. It exists as a draft and is being developed further; it covers person-to-person payments, payments at the point of sale, e-commerce, QR code payments and cash withdrawal at ATMs, among others. Parts of the offline specification remain open, as does everything that depends on the regulation still being negotiated.

Holding limit and deposits

For banks the holding limit is the economically most sensitive element of the project. Without a cap, large amounts could shift from bank deposits into central bank money at short notice in a crisis of confidence. The proposed regulation therefore provides for a limit on holdings per person; the level has not been decided, and who sets it is disputed between Council and Parliament. Eurosystem analyses have so far worked with a hypothetical value of up to 3,000 euro per person – a figure used for impact assessment, not a decision. Holdings by businesses are in principle not envisaged; for them the digital euro is a way to receive payments, not to hold balances.

This is exactly where the waterfall mechanism comes in: it makes the holding limit invisible in daily use, because amounts above the cap end up on the payment account – and remain available there as a deposit.

Privacy

The Eurosystem is not to be able to tell from payment data who initiates a payment or what it is for. Linking people to payments stays with the payment service providers, which are subject to anti-money-laundering obligations in any case. Offline payments are designed to offer a cash-like level of confidentiality, because the payment takes place directly between the devices. The European Parliament strengthened the offline function explicitly in its position.

Identity verification at onboarding is a separate matter. Here the EUDI Wallet and national implementations such as d-you are likely to play a role – as a means of proving identity to the payment service provider, not as a means of payment.

Acceptance obligation and compensation

The digital euro is intended to become legal tender, meaning it would have to be accepted as a rule. Council and Parliament agree that there will be exemptions – micro and small enterprises are under discussion, as are merchants that accept no electronic payments at all. The choice between cash and digital euro stays with the payer.

Basic functions are to be free of charge for private individuals. The Eurosystem levies no transaction fees and funds development and operation from its own income, as it does with the supply of banknotes. Fees between merchants and payment service providers are envisaged but capped for a transitional period; the design of those caps and the length of the transition are currently being negotiated.

Relevance for banks and payment service providers

• This is a distribution project, not an issuance project. Institutions do not create the money, they distribute it. What has to be built is onboarding, the user interface, AML checks, fraud detection and reconciliation.
• The bridge to the payment account is the real integration task. Funding, defunding, waterfall and reverse waterfall reach directly into the core banking system and have to run in seconds while staying accounting-clean.
• Not everything at once. The scheme covers a large number of use cases. It makes sense to prioritise those carrying the bulk of the volume – person-to-person payments, funding and defunding, point of sale and e-commerce – and to add offline and special cases later.
• The legal side is not settled. Holding limit, fee model and exemptions from the acceptance obligation depend on the trilogue outcome. Wherever architecture decisions rest on those parameters, they should stay configurable.
• Existing infrastructure carries over. Anyone already settling instant payments through TIPS and processing ISO 20022 natively already meets a substantial part of the requirements.

Sources for specifications

• European Central Bank – Digital euro
• ECB – Preparation phase of a digital euro, closing report
• ECB – Digital euro pilot
• ECB – Digital euro scheme rulebook
• European Parliament – Legislative Train, digital euro
• Deutsche Bundesbank – Digital euro