The European Parliament is poised to prioritise an offline-only launch of the digital euro, with an online version introduced only if private European payment solutions fail to deliver, according to reporting by MLex. The draft compromise text, prepared for lawmakers in the ECON committee, marks a significant shift in how the single currency’s digital form could be rolled out across the euro area.
The compromise would formally establish the digital euro in an offline form, described as a “digital representation of cash, non-account-based and bearer-type instrument” capable of operating without an internet connection. An online version would be considered later, and only under specific conditions.
The proposal is being steered through Parliament by Spanish centre-right lawmaker Fernando Navarrete and is expected to be voted on at the committee level on May 5.
Sovereignty Test Before Online Activation
Under the draft seen by MLex, the European Commission would be required, by late 2028 at the latest, to assess whether a “pan-European sovereign retail payment solution” operates effectively across the euro area. The solution would need to cover person-to-person transfers, point-of-sale transactions and e-commerce payments.
If such a private-sector European system functions adequately across all euro area Member States, the online digital euro would not be established. If the assessment concludes that no such solution exists, the Commission could then trigger the activation of the online digital euro.
This mechanism effectively introduces a sovereignty safeguard into the legislation. Rather than launching both online and offline components in parallel, the compromise prioritises a digital form of cash while leaving broader retail infrastructure competition open to European market actors.
For the European Central Bank, this would represent a more cautious and conditional rollout than originally envisaged when the Commission proposed the digital euro regulation in June 2023.
Clear Separation of ECB Tasks
The compromise text also addresses institutional concerns about the ECB’s expanding role.
According to MLex, the draft introduces a clear separation between the ECB’s monetary policy and supervisory responsibilities and its activities related to the digital euro payment system. A dedicated unit would manage and operate the digital euro infrastructure, with independence in accounting, organisation and decision-making from oversight functions.
This provision appears designed to reassure lawmakers wary of conflicts of interest or excessive concentration of power within the central bank.
Mandatory Pilot and Cybersecurity Testing
Before any issuance decision, the ECB would be required to complete infrastructure development and conduct real-life pilot testing involving payment service providers, merchants and users.
The draft reportedly mandates a dedicated cybersecurity validation phase lasting at least six months. Particular attention would be paid to offline-specific risks, including double spending, device integrity and cryptographic protection.
The ECB would also have to publish a report detailing findings, shortcomings and corrective measures before authorising issuance.
These safeguards reflect persistent concerns among policymakers about operational resilience and cyber risk, especially given the offline model’s reliance on secure hardware devices rather than centralised real-time settlement.
Legal Tender With Targeted Exemptions
The digital euro would retain legal tender status under the compromise. However, MLex reports that small enterprises — defined in the draft as businesses below specific employee and turnover thresholds — would be allowed to refuse digital euro payments unless they already accept comparable digital means of payment.
This exemption seeks to balance mandatory acceptance with proportionality for smaller firms that may face higher adaptation costs.
Next Steps in the Legislative Process
The Council of the EU adopted its position on the broader single-currency package in December. Once the European Parliament finalises its stance, trilogue negotiations between Parliament, Council and Commission will begin to agree on a common text.
If adopted in its current form, the compromise would reposition the digital euro primarily as a digital cash instrument designed to safeguard monetary sovereignty and public access to central bank money, rather than as a direct competitor to existing private retail payment systems.
With the May 5 committee vote approaching, the ECON compromise signals that Parliament is seeking a more gradual and conditional path toward a digital euro, one that places sovereignty, resilience and institutional safeguards at its core.
Related: ECB Outlines Core Design Features for the Digital Euro in New Technical Annex