European Union negotiates legal framework for digital euro

The European Parliament and the Council of the European Union are currently negotiating the legal framework for the digital euro. This trilogue process aims to reach a political agreement by the end of 2026 to facilitate a potential launch of the currency in 2029.

A primary point of contention in the negotiations involves data privacy and anonymity. The European Parliament advocates for strict adherence to GDPR standards, suggesting that personal data processing should only occur when absolutely necessary and overseen by data protection authorities. In contrast, the Council of the EU is seeking regulations that would allow for more extensive data tracking.

Discussions are also focused on the digital euro’s offline functionality, which would allow direct token exchanges between devices. The Parliament has proposed that any data storage on a user's smartphone must require explicit consent. Additionally, lawmakers are debating anonymity thresholds for small transactions, with proposed limits ranging between 100 and 200 euros.

The digital euro is intended to serve as a digital complement to cash and existing private payment methods rather than a replacement. A pilot program involving 36 payment service providers and 19 national central banks is scheduled to begin in the second half of 2027.