The European Union believes the digital euro could reduce its reliance on US-based payment systems such as Visa and Mastercard, as well as Apple Pay and Google Pay, as the bloc seeks to strengthen European financial autonomy.
Brussels hopes to provide a local alternative for payments in stores and online, allowing citizens to pay easily via card, app or banking services.
Key vote in the European Parliament
The EU is set to move one step closer to the digital euro on Tuesday, when lawmakers are expected to vote on the long-awaited proposal.
The European Central Bank first proposed the digital euro in 2020, followed later by an official proposal from the European Commission.
The project cannot proceed without approval from EU member states and the European Parliament.
What is the digital euro?
The digital euro is not the same as money held in a bank account. While current digital payments rely on funds stored in bank accounts and processed through private payment networks, the digital euro would exist in a separate virtual wallet issued by the central bank.
The European Central Bank (ECB) hopes the digital euro could be available to citizens by 2029, provided that negotiations are finalised by the end of this year.
A pilot phase is expected in mid-2027 to test how the system would work in practice.
How it would work
The digital euro would have the same value as cash and banknotes.
Users would open an account through a bank or public institution, such as a post office, and transfer funds into a digital wallet.
Payments could then be made in shops, online, or between individuals using cards, apps or mobile phones.
Officials say the system would include privacy protections, with some offline functionality designed to offer confidentiality similar to cash transactions.
ECB adviser Alessandro Giovannini said the system would not replace existing payment methods, adding that cash would remain available.
EU concerns over payment dependence
Lawmakers argue that payment systems are not neutral but represent a form of economic power.
EU officials have pointed to the dominance of US companies in European payments, noting that nearly two-thirds of card transactions in the eurozone are processed by non-European firms, mainly Visa and Mastercard.
Supporters of the project say the digital euro would help reduce strategic dependence and provide a “sovereign, pan-European payment solution”.
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