Digital Euro and Cash: How the EU Builds a New Payment System Without Abandoning Cash
“Time for Action” analyzed the decision of the Council of the European Union, which officially approved its negotiating position on the introduction of the digital euro and, at the same time, the strengthening of the status of cash payments. This is not about launching a new currency immediately, but about creating a full legal framework that will define what a state digital currency in the EU will look like, how it will function, and what will happen to cash alongside it. The very fact that two decisions are being advanced in parallel the digital euro and the protection of cash demonstrates Brussels’ core logic: the transition to digital payments must not mean the displacement of traditional money.
At the heart of the proposal package are two regulations that form the legal framework for the potential issuance of a digital euro, and a separate regulation aimed at guaranteeing the broad acceptance and availability of cash across the European Union. The Council of the EU explicitly stresses that the digital euro is intended to complement, not replace, physical banknotes and coins. This wording is fundamental, because it addresses one of the main public concerns fear of a complete abandonment of cash and total digital dependence.
The digital euro is conceived as a public payment instrument, directly backed by the European Central Bank. Its key distinction from private digital payment solutions lies in the fact that it would constitute public money, not a product of a specific bank or technology company. For this reason, the EU views the digital euro as a way to preserve central bank money as the “anchor” of the payment system in an environment dominated by card networks, mobile applications, and global payment platforms.
According to the Council’s agreed position, the digital euro would be available to individuals and businesses for payments anywhere in the euro area. Particular emphasis is placed on the possibility of online and offline use, meaning that transactions could be carried out even without an internet connection. This is not a technical detail, but a strategic requirement that makes the digital euro functionally closer to cash while simultaneously increasing the resilience of the payment system in the event of outages, cyberattacks, or crises.
Another important focus is privacy. The documents explicitly state that the digital euro must ensure a high level of transaction confidentiality. For the EU, this is critical, because without clear data protection guarantees, any state digital currency risks losing public trust before it is even launched. At the same time, the digital euro would not operate in isolation: it would function alongside private payment instruments, such as bank cards or mobile applications, rather than crowding them out of the market.
A separate section of the Council’s position addresses limitation mechanisms designed to protect financial stability. To prevent the digital euro from becoming a vehicle for large-scale withdrawals from the banking system, the ECB would set limits on the amounts that could be held in digital accounts or wallets. These limits would not be fixed permanently; they would be reviewed at least every two years in line with security and stability criteria. This approach shows the regulator’s attempt to strike a balance between user convenience and systemic risks to the banking sector.
It is also significant that the legal framework for the digital euro establishes rules for payment service providers. In particular, they would not be allowed to charge consumers for certain mandatory basic services, such as opening and closing accounts, executing digital euro payment transactions, or funding and defunding digital wallets. This signals that the digital euro is not intended as a commercial product, but as a public good, accessible without hidden fees. At the same time, additional value-added services may be subject to charges, leaving room for business models within the new system.
In parallel with the digital euro, the Council of the EU took what may seem like a step in the opposite direction strengthening the status of cash. It proposes to effectively ban refusals to accept cash payments in retail and services, with clearly defined exceptions, such as online sales or automated points of service. Businesses may indicate a preference for cashless or digital payments, but they would not be permitted to exclude cash entirely. For many EU countries, this responds to the trend of “silent displacement” of cash, which has occurred without formal bans but through everyday business practices.
In addition, member states are required to monitor access to cash across their territories and to take corrective measures where problems arise. They are also expected to establish cash resilience plans for situations involving widespread and severe disruptions of electronic payment systems. Taken together, these measures send a clear signal: even in the digital era, cash remains an element of security and social stability.
As for timing, once the legal framework is finally adopted by the European Parliament, it will be up to the ECB to decide whether to issue the digital euro. According to preliminary assessments, it could be launched by 2029. This reflects a cautious, phased approach, without abrupt moves and with room to adjust the model over time.
The expanded conclusion of “Time for Action” is that the European Union is not merely introducing a new payment instrument, but is attempting to rebuild the architecture of money in response to technological and geopolitical challenges. In this logic, the digital euro is not an alternative to cash and not a competitor to private payment services, but a safety mechanism designed to preserve public control over the monetary system. The simultaneous strengthening of the role of cash shows that the EU recognizes the risks of digital monoculture and seeks to preserve real freedom of choice in payment methods for citizens. This is not a revolution, but a cautious evolution, in which the key issue is not speed, but trust. And it is precisely whether the EU can combine technological progress with the protection of fundamental financial freedoms that will determine the long-term success of the digital euro.
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