The European Union is pushing forward with plans for a digital euro, a central bank digital currency that could reshape how Europeans pay for goods and services. The project, backed by the European Central Bank (ECB), is designed to complement cash and reduce the continent's dependence on US-based payment processors like Visa and Mastercard, which handle 61% of card payments in the eurozone and nearly all cross-border transactions.
Under the European Commission's proposal, users would receive a digital wallet with a spending limit yet to be defined, enabling both online and offline payments with untraceable transactions. If legislation passes by the end of 2026, the digital euro could be available for retail use by 2029.
Political and Economic Drivers
The push is as much political as it is financial. The return of US President Donald Trump to the White House, with his confrontational approach to foreign policy and trade, has accelerated the debate. At the European Council in mid-March, EU leaders set a deadline to approve the legislation before the end of 2026. The ECB's initiative also responds to the rise of privately issued stablecoins, which have steadily eroded the traditional payments landscape.
The contrast with other major economies is stark. The US has moved in the opposite direction, advancing the GENIUS Act to give private stablecoins a regulatory footing, while China has already rolled out its digital yuan at scale. Europe is charting a middle path — state-backed, tightly regulated, and designed to keep monetary sovereignty out of private hands.
Banking Sector Opposition
Not everyone is convinced. As the legislation advances, opposition from commercial banks has intensified. At an industry event in Brussels in mid-April, French Banking Federation chairman Daniel Baal took direct aim at the project. "The retail digital euro, as currently designed, disrupts this balance by turning central bank money into a direct competitor of commercial bank money," he said.
Wero, the European payments platform backed by major banks, is also wary. Its CEO, Martina Weimert, acknowledged a use case for offline payments but warned that legal tender status, which would oblige merchants to accept the digital euro just as they must accept cash, would create a "distortion of competition."
Supporters argue that the banks are missing the point. "It's as if cash did not exist, and the industry argued it was unfair because merchants have to accept it, and users don't pay a fee," Peter Norwood, a researcher at Finance Watch, a European non-profit, told Euronews. "Cash is a public good. That is what the digital euro is meant to preserve in the digital age." Without legal tender status, he argued, the project would never reach critical mass.
Privacy and Crypto Concerns
Opposition extends beyond the banking sector. Privacy advocates and decentralisation campaigners have raised concerns that a state-issued digital currency could give governments unprecedented visibility over citizens' spending — and, potentially, the power to restrict it. The planned cap on individual holdings has done little to ease those fears. Crypto industry voices, though a smaller force in Europe than in the US, have also pushed back, wary of a digital currency that competes with decentralised alternatives while operating under full institutional control.
Parliamentary Battle Ahead
The fate of the digital euro now rests largely with one person: Fernando Navarrete Rojas, a Spanish centre-right MEP from the European People's Party (EPP) who is steering the file through the European Parliament, the only EU institution yet to move it forward. Navarrete has an extensive background in the banking sector, having held high-level positions at the Bank of Spain and served as director of finance at the Spanish Official Credit Institute. He also led economic and public policies at the Foundation for Social Analysis and Studies (FAES), a right-wing think tank linked to former Spanish Prime Minister José María Aznar López.
According to his public meeting records, he held more than a hundred meetings specifically on the digital euro since taking over the file in December 2024. At an industry event in mid-April organised by the French Banking Federation, Navarrete was candid about his scepticism, describing the digital euro as not an urgent priority. "I'm sorry that we started maybe with not the most urgent parts of the building," he said. He made it clear he favours the private sector, describing it as "much more efficient." Like the commercial banks, he warned that legal tender status, which he called an "atomic weapon," could fatally undermine private alternatives. "Even if (the digital euro) is no good, you're forced to use it," he said.
The ECB is trying to minimise tensions by arguing that the private sector will be involved in shaping and managing the digital euro. Commercial lenders will act as the ultimate service providers and will be compensated by the ECB for doing so. With EU governments strongly backing the project, the Parliament is where the battle will be won or lost. The outcome will have significant implications for Europe's digital sovereignty and the future of payments across the continent.
