The European Union is at a critical juncture in the development of digital currencies: the continued decline in cash usage, the long-standing reliance of payment systems on US companies like Visa and Mastercard, and the growing adoption of US dollar-denominated stablecoins—all these factors are converging to accelerate the implementation of the digital euro. On September 19th, at a meeting of EU finance ministers in Copenhagen, member state finance ministers, European Central Bank (ECB) officials, and the European Commission reached an agreement on the next steps for the digital euro. Reuters used the word "compromise" in its report, suggesting the decision may have been forced. Meeting chair Pascal Donohoe stated at a joint press conference that the Council of EU Finance Ministers will have the opportunity to participate in discussions and deliberate on relevant issues before the ECB makes a final decision on the issuance of the digital euro. Furthermore, the Council will have the final say on whether to issue the digital euro and setting the limit for each citizen. While the basic direction of the "compromise" has been clarified, many technical details, such as the upper limit per person, issuance rhythm, account design, and clearing mechanism, were not publicly disclosed at the meeting. ECB's Strategic Intentions At the meeting, ECB President Christine Lagarde emphasized that the digital euro is not only a payment tool but also a political proposition, reflecting Europe's determination to safeguard its sovereignty in critical infrastructure and cross-border payments. She pointed out that if Europe continues to rely on US payment systems such as Visa and Mastercard, it may lose its core voice in the digital age. Lagarde has repeatedly urged the European Parliament to accelerate the relevant legislative process to avoid lagging behind in monetary technology. She believes that with the rise of private stablecoins and digital financial services, the lack of a digital euro could erode the integrity and competitiveness of the Eurosystem. European Central Bank Chief Economist Philip Lane previously noted that approximately two-thirds of card payments in the eurozone are processed by US payment companies such as Visa and Mastercard. This dependence poses an external risk to the payment infrastructure: changes in US policies, regulations, or international relations could indirectly affect the European payment network's incident response, fee structure, or data processing. According to Cryptopolitan, the proportion of stablecoin usage in Europe increased from 16% in 2024 to 34% in 2025, with the majority of these stablecoins denominated in US dollars. Furthermore, central bank insiders revealed that to mitigate significant financial or technological risks, the digital euro would be designed as an "alternative payment path." This means that in the event of an attack or failure in the banking system or payment network, residents would still be able to complete daily payments through central bank-backed e-wallets.
Delays in the regulatory process
Although the finance ministers' meeting reached a compromise on the roadmap for advancement, there is still a long process from proposal to formal legislation. As early as June 2023, the European Commission had proposed a draft bill on the digital euro, but for it to come into effect, it still needs to be jointly approved by the European Parliament and the European Council (that is, the member states' governments).
The Council hopes to complete its internal review by the end of 2024, but some member states still have reservations about issues such as privacy protection, financial stability, and national sovereignty. At the European Parliament level, the rapporteur, center-right MEP Fernando Navarrete, is cautious about the draft. He once called the digital euro a "last resort" and questioned its necessity. Fernando stated, "From a cost-benefit perspective, a digital euro is not the best option. Within the ECB's constantly evolving narrative, a digital euro could raise significant public concerns about data privacy, while the allocation of responsibilities in areas such as fraud prevention and anti-money laundering also requires careful assessment." According to Politico, the ECB hopes to complete all political approval procedures by the first half of 2026, followed by a construction and testing period of up to three years. This means that even if the roadmap proceeds smoothly, ordinary consumers may not be able to actually use the digital euro until 2028. Concerns and Opposition from the Banking Industry The banking industry is cautious and even opposed to the launch of the digital euro. Some bank executives worry that if the public shifts their deposits to central bank-backed digital wallets, traditional banks' deposit bases could be weakened, impacting their lending capacity and profitability. This concern about "deposit outflows" has been repeatedly mentioned in forecasts and advisory reports from central banks around the world. Furthermore, many banks have questioned the distribution of operating costs and technical responsibilities. Deploying supporting systems such as payment gateways, clearing interfaces, anti-money laundering monitoring, and customer identity verification requires significant investment in capital and operational resources. If the profit mechanism is not properly designed, banks may assume excessive risk. Privacy protection is also a key concern for opponents. If account or transaction data in the digital euro is designed to be traceable or monitorable, public trust in it could decline significantly. Countries like Germany and the Netherlands insist that the highest standards of privacy protection must be implemented to prevent payment transactions from leaking personal consumption information. Others point out that the appeal of the digital euro could be diluted as the global payment competition landscape shifts. Furthermore, Europe may also face the risk of "digital currency fragmentation" in the future: different member states developing their own central bank digital currencies (CBDCs) or payment systems, making regional coordination difficult.
Although the compromise reached at the Copenhagen Conference marks a breakthrough, the digital euro still faces many challenges before it can be truly implemented.
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