What does the digital euro entail? The project is making significant progress and in a few years it could be introduced permanently

For years European institutions have been working on the so-called "digital euro," meaning an alternative form of currency to physical banknotes for digital payments within eurozone countries, without relying on traditional circuits – such as credit cards or debit cards. The project's path will be long and intricate, but there have recently been important steps forward.

In December 2025 the initiative received legal approval from the Council of the European Union, while last June the European Parliament (the other institution that, together with the Council, exercises legislative power) also gave the green light to the project – but again only from a legal standpoint. In mid-July, moreover, the European Central Bank (ECB) defined the list of 36 operators who will take part in the project's testing phase – among those selected are also several Italian companies, such as Poste Italiane, Montepaschi, and UniCredit, among others. If the negotiations and tests conclude positively, the digital euro could come into effect as early as 2029.

How the digital euro will work

The digital euro, should it come into operation, would be a genuine currency, and would therefore be mandatorily used in all countries that adopt the euro – but it might be necessary to use an app, a sort of digital wallet in which to keep one's holdings of digital euros. Through this tool it would be possible to pay in physical stores and on e-commerce sites, as well as to transfer money directly from one person to another. Another planned feature is the ability to make payments even without an internet connection.

One of the elements that would distinguish the digital euro from current card payments concerns transaction costs. Consumers should not have to pay fees, while for merchants these would be subject to legally established limits, with the aim of containing the costs currently applied by private payment circuits. The same rules would apply in all countries of the euro area. The system could also broaden access to digital payments even for those without a bank account, through the possibility of converting cash into digital euros.

The introduction of the digital euro would also carry strategic significance for European autonomy in the payments sector. Today a significant share of the infrastructure used in the digital payment sector belongs to American companies, such as Visa, Mastercard, and PayPal. Creating a European system would instead make it possible to reduce this dependence and to strengthen the European Union's technological and financial sovereignty, an issue that has become even more relevant in light of the progressive deterioration of diplomatic relations with the United States, due to Trump's controversial and chaotic foreign policy.

Misconceptions about the digital euro

The main political supporters of the digital euro are found among left-wing and centrist parties, while the greatest resistance comes from the right-wing and far-right groups in the European Parliament. One of the main criticisms leveled by the project's detractors concerns the fear that the new currency could end up replacing cash – however, this is not the project's goal: the digital euro should simply stand alongside physical money, offering citizens an additional payment method.

Another recurring objection consists of associating the digital euro with cryptocurrencies, but these are profoundly different tools. The former would be legal tender issued by the ECB, with a value exactly equivalent to that of the physical euro, while the latter are digital assets whose value can undergo strong and rapid fluctuations – not by chance, they are often used as investment tools.

Finally, the doubts about the project concern the possible impact on the banking and financial sector, which has expressed strong opposition to the initiative. If a portion of the payments currently made through banking circuits were transferred to the digital euro, banks could indeed lose a share of the revenue derived from fees. To limit the impact in this area, the regulation under discussion provides that the ECB set a cap on the amount of digital euros held in one's "wallet," and that these holdings not generate interest, in order to prevent the digital euro from becoming an alternative to bank deposits.