The European Parliament has taken a major step towards introducing the digital euro, approving its negotiating position on the legislation that could pave the way for the EU’s first central bank digital currency. If the remaining negotiations proceed as planned, Europeans could begin using the new payment method by the end of the decade.

The proposal, developed by the European Central Bank (ECB), aims to provide a secure, state-backed digital alternative to cash while strengthening Europe’s financial independence from foreign payment providers.

EP gives green light to negotiations

On Thursday, MEPs voted overwhelmingly in favour of the Parliament’s position on the digital euro, with 416 votes in favour, 169 against and 22 abstentions. The vote allows negotiations to begin with the Council of the European Union and the European Commission to finalise the legislation.

The Parliament also approved its position on how the digital euro should operate in EU member states that have not yet adopted the single currency. Hungarian MEPs from the Tisza Party and the Democratic Coalition (DK) supported the proposal, while representatives of Fidesz-KDNP and Mi Hazánk voted against it.

What exactly is the digital euro?

Unlike existing electronic money held in commercial bank accounts, the digital euro would be issued directly by the European Central Bank and eurozone national central banks. It would effectively become the digital equivalent of euro banknotes, offering the same central bank guarantee while being accessible through a mobile application or payment card.

The ECB stresses that the digital euro is not intended to replace cash, but to complement it. Cash would remain available and protected by law, while consumers would gain an additional payment option for everyday purchases. Basic services, including opening an account, checking balances, making transfers and paying for goods and services, are expected to be free of charge for users.

Reducing dependence on Visa and Mastercard

Supporters argue that one of the project’s biggest advantages is strategic autonomy. Today, the vast majority of card payments in Europe rely on the infrastructure of US-based companies such as Visa and Mastercard. The digital euro would establish an entirely European payment system under public control, reducing reliance on external providers and strengthening the EU’s financial sovereignty.

The new infrastructure could also lower payment processing costs for merchants, potentially leading to lower prices for consumers over time. As Hungarian MEP Kinga Kollár noted, the project could allow Europe to reduce its dependence on American payment networks while maintaining full control over its own digital payment infrastructure.

Online and offline payments will also be possible

The proposed system would include two forms of the digital euro. The online version would operate through centrally managed digital accounts, with banks and payment providers handling customer services while settlements take place on the ECB’s infrastructure.

The offline version would function more like digital cash. Funds would be stored directly on a smartphone or payment card, allowing users to make payments without an internet connection. Transactions between devices would offer privacy levels similar to those of cash payments. Although users could hold both forms simultaneously, the ECB is expected to introduce holding limits, with discussions suggesting a ceiling of around EUR 3,000 per person.

The only key issue is privacy

Privacy has been one of the most debated aspects of the project. Critics have raised concerns that a central bank digital currency could enable governments to monitor citizens’ spending habits. However, the current proposals state that the ECB would not have direct access to individuals’ payment data.

Instead, banks and payment providers would continue managing customer information and would only provide anonymised, aggregated data where legally required. Offline transactions would offer the highest level of privacy, with no central transaction log comparable to cash payments. Anti-money laundering and counter-terrorism financing rules would still apply to online transactions.

What could it mean for Hungary?

As Hungary remains outside the eurozone, the digital euro would not automatically become legal tender in the country. Under the current proposal, only Hungarian banks serving a significant number of eurozone customers would be required to offer digital euro accounts. Merchants would remain free to decide whether to accept the new payment method.

Should Hungary eventually adopt the euro—a stated objective of the current Tisza-led government—the digital euro would become widely available alongside traditional euro cash and existing electronic payment methods.

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When could it launch?

The ECB completed the investigation phase of the project in 2023 and is currently developing the technical framework through a preparation and testing phase. The tentative timetable foresees:

  • 2026: Adoption of the legal framework;
  • 2027: Pilot testing and first live transactions;
  • 2029: Possible official launch, subject to final political approval.

If the legislative process stays on schedule, Europeans could soon have access to a new form of public money—one designed for the digital age while preserving the role of cash in everyday life.

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