The Council of the European Union has agreed its negotiating position on legislation that would enable the introduction of a digital euro while strengthening the legal tender status of physical cash. The move marks a major step in the EU’s single currency agenda, linking digital payments innovation with explicit safeguards for cash use across the euro area.
The agreement covers two draft regulations establishing a legal framework for a potential digital euro and a separate regulation aimed at ensuring the wide acceptance and availability of euro banknotes and coins. According to the Council, the package is intended to improve Europe’s strategic autonomy, economic security, and resilience in the payments sector.
Digital euro design clarified
Under the Council’s position, the digital euro would complement cash and be available to the general public and businesses for everyday payments throughout the euro area. As a form of public money directly backed by the European Central Bank, it is intended to preserve central bank money as the anchor of the payments system.
The text confirms that the digital euro should be usable both online and offline, allowing payments even without an internet connection. It would support payments and transfers with a high degree of privacy and coexist alongside private payment solutions such as cards and mobile apps.
The Council also addressed financial stability concerns. To prevent the digital euro from becoming a store of value, holding limits would apply to digital euro accounts and wallets. These limits would be set by the ECB within an overall ceiling agreed by member states and reviewed at least every two years.
Consumers would benefit from free access to core services. Payment service providers would be prohibited from charging fees for mandatory functions such as opening or closing digital euro accounts, making basic payments, or moving funds between traditional accounts and digital euro wallets. Fees could apply only to optional value-added services.
The Council further backed rules to ensure fair access to mobile device hardware and software for providers offering digital euro services. It also outlined a compensation framework for payment service providers, including capped interchange and merchant service charges during a transitional period of at least five years, followed by cost-based caps thereafter.
Political backing from Denmark
Danish ministers welcomed the agreement as a strategic signal. Stephanie Lose, Denmark’s Minister for Economic Affairs, said the digital euro would contribute to a more robust and competitive European payments system and strengthen the euro’s international role.
Industry and Business Minister Morten Bødskov added that the initiative would enhance the resilience of the euro area’s payments infrastructure. He said the Council’s agreement demonstrated that the EU is capable of acting decisively in a strategically important area.
Cash acceptance reinforced
Alongside the digital euro, the Council placed strong emphasis on protecting cash. Euro banknotes and coins remain the only legal tender in the euro area, and the new regulation aims to clarify and reinforce this status.
The Council’s position effectively seeks to ban the non-acceptance of cash by retailers and service providers, with limited exceptions such as distance sales, including online purchases, and unmanned points of sale. Businesses may still indicate a preference for digital payments, but would generally be required to accept cash.
Member states would be required to monitor cash acceptance and access across their territories using common indicators and to take corrective action where needed. They would also be expected to establish cash resilience plans to ensure access to cash during widespread or severe disruptions to electronic payment systems.
Next steps
With the negotiating mandate agreed, the Council can now enter talks with the European Parliament to finalise the legislation. Once adopted, the final decision on whether to issue a digital euro will rest with the ECB, which has previously indicated that a digital euro could be operational by around 2029.