Frankfurt: Technical teams at the European Central Bank started building a digital euro pilot this quarter with a selected group of payment service providers. The legal basis for the thing they are building does not exist.
Negotiators closed that gap only part of the way this summer. The Council adopted its negotiating position in December 2025. Parliament voted to open negotiations in June 2026 after supporting the project in February. Trilogues on the digital euro package began at the end of July, and the institutions set themselves the goal of finishing before the year ends.
The package covers more than a new payment instrument. It pairs the digital euro regulation with rules on the legal tender status of cash, an arrangement the Council described as a coherent framework for public money in both its forms. Governments insisted on that pairing because voters read any central bank digital currency as a threat to notes and coins.
Parliament framed the project in sovereignty terms. Card payments across the euro area run largely on two American networks, and a growing share of online payment volume flows through non-European providers. Members argued that a public payment rail reduces that dependency and limits fragmentation in retail payments. Euronews reported the June vote in exactly those terms.
Banks argue the opposite risk. If households can hold central bank money directly, deposits may leave commercial balance sheets during a period of stress, and the institutions that fund mortgages and business lending would face a run they cannot stop. The Council answered with holding limits and a design that pays no interest, so that the digital euro works as a means of payment rather than a store of value.
Where the holding limit lands remains the single most contested number in the file. Set it low and the instrument becomes too marginal to displace anything. Set it high and the deposit-flight argument acquires force. Neither co-legislator has committed publicly to a figure, and the trilogue will settle it. Parliament’s file summary tracks the state of play.
Offline functionality forms the second hard problem. The Council supports a digital euro that works without a network connection, which requires storing value on a device and settling later. Privacy advocates want offline payments to leave no trace at all, matching cash. Anti-money-laundering authorities want traceability above a threshold. Engineers must implement whichever compromise the politicians reach.
Piero Cipollone of the ECB Executive Board pressed Parliament to move precisely because the pilot cannot wait indefinitely for a statute. Building payment infrastructure to specifications that legislators may later change wastes money, and the bank has already spent years on preparation.
A December finish looks demanding rather than impossible. Trilogues on files of this size frequently slip a Presidency, and this one carries an unusual burden because it touches national attachment to cash. Should the timetable hold, issuance still sits years away, since the regulation must enter into force before the ECB decides whether to issue at all.
The pilot continues either way. Nobody outside it can spend a digital euro, and nobody will for some time.
