Digital Euro
Europe Introduces a New Digital Payment Method

09/29/2026

The digital euro is set to become the digital counterpart to cash in the near future: a public means of payment available across Europe that brings key benefits of cash, particularly privacy and anonymity, into the digital realm.

It is intended to operate under European oversight while also helping to reduce Europe’s dependence on international private payment service providers. The aim is to establish an integrated and resilient European payments system that strengthens European sovereignty in the field of payments.

“The question of whether the digital euro will happen has been decided. The digital euro is coming. We must now ensure that it is introduced in a market-oriented way, so that banks can fulfil their role,” emphasised Markus Ferber, MEP and CSU expert on financial and economic affairs. Florian Rentsch, Chairman of the Executive Board of the Association of Sparda Banks, stressed that the European Central Bank should focus on its role, while the customer relationship must remain with the banks.

The key question currently being negotiated in the trilogue between the European Commission, the European Parliament and the Council is therefore how the digital euro should be designed in practice. For the banking sector, this concerns in particular the remuneration of participating institutions, the preservation of customer relationships and the costs of implementation.

More Than a New Means of Payment

Dr Alexandra Hachmeister, Head of the Digital Euro Central Office at Deutsche Bundesbank, placed the project in a broader strategic context. The digital euro is “far more” than a technical means of payment. It is about safeguarding Europe’s ability to act and its sovereignty in an increasingly digital payments landscape.

According to the payment statistics presented, 2025 was the first year in which more payments at the point of sale were made electronically than with cash. Cashless payments accounted for 55% of transactions. A large proportion of digital payments is processed through international providers such as Visa, Mastercard and PayPal, creating strategic dependencies for European businesses.

Data protection is another key consideration. Payment data generated through the digital euro is not intended to be commercialised. The central bank should only have access to anonymised data and should not be able to link individual transactions to specific individuals.

“For us, the digital euro is not an end in itself; it is a strategic response" to the digitalisation of payments, geopolitical dependencies and global competition over digital financial infrastructure, Hachmeister explained. Existing European payment services such as Wero should complement the digital euro and benefit from common European standards. Nor is the digital euro intended to replace cash. All existing forms of payment should continue to coexist alongside it.

Banks Remain Part of the System

From the Bundesbank’s perspective, a key prerequisite is preserving the existing two-tier structure of the banking system. Citizens should not hold accounts directly with the European Central Bank; instead, the existing relationship between customers and their banks should be maintained. The digital euro could, for example, be offered through an existing bank account or via a wallet provided by the respective bank.

The mandatory ECB wallet originally under discussion is no longer envisaged under the current proposals. A central wallet would instead be available only as a fallback option. Key questions concerning remuneration and costs remain unresolved.

Holding Limits and Financial Stability

The digital euro will not bear interest and is explicitly not intended to function as an investment product. Holding limits are designed to prevent substantial amounts being transferred from commercial bank deposits into digital euros, which could otherwise affect liquidity in the banking system.

The level at which these limits will be set, the authority responsible for determining them, and the arrangements for remunerating participating banks remain subject to negotiation. At the same time, the Bundesbank stresses that the introduction of the digital euro will not undermine the stability of the banking sector.

Pilot Phase as the Next Step

Alongside the political negotiations, technical preparations are already under way. The European Central Bank is planning a 12-month pilot programme for the second half of 2027 and has already selected payment service providers for the initiative. In Germany, institutions from all three pillars of the banking system (public sector banks, cooperatives and commercial banks) are expected to participate.

If the pilot project is successful and the legislative process is completed, the digital euro could be introduced gradually from 2029 onwards. By then, key issues in particular such as holding limits, remuneration and the specific role of banks, will need to be resolved.

Questions surrounding the digital euro were at the heart of the 8th Finance & Economics Roundtable, a high-level expert forum organised by the HSF Brussels Office in cooperation with the Genossenschaftsverband Bayern e.V. (GVB) and the Association of Sparda Banks. The event featured Dr Alexandra Hachmeister, Head of the Digital Euro Central Office at Deutsche Bundesbank, as a prominent guest speaker. The online event was moderated by Markus Ferber, MEP, CSU finance expert and coordinator of the EPP Group in the Committee on Economic and Monetary Affairs of the European Parliament.