Europe’s payment system is on the brink of its biggest shake-up in decades.

A digital euro, a push for sovereignty from US payment giants and a bitter fight between banks and Brussels are all coming to a head — and the outcome could affect how Europeans conduct even the simplest day-to-day payments.

The digital euro is electronic cash, backed by the European Central Bank (ECB) and designed to sit alongside banknotes and the services offered by commercial lenders.

Under the European Commission’s proposal, users would get a digital wallet — with a spending limit yet to be defined — that works for both online and offline payments, with transactions designed to be untraceable.

If legislation passes before the end of 2026, it could be available for retail payments by 2029.

The push is political as much as it is financial.

Visa and Mastercard, both American, account for 61% of card payments in the eurozone and nearly all cross-border transactions, according to ECB data.

US President Donald Trump’s return to the White House and his hostile approach to both foreign policy and trade accelerated the debate, and at the European Council in mid-March, EU leaders set a deadline to approve the legislation before the end of 2026.

The ECB’s push to launch one is partly a response to the rise of privately issued stablecoins, which have steadily eaten into the payments landscape.

The message from Brussels and institutions across the continent is clear: Europe wants to control its own money.

The contrast with other major economies is stark. The US has moved in the opposite direction, advancing the GENIUS Act to give private stablecoins a regulatory footing, while China has already rolled out its digital yuan at scale.

Europe is charting a middle path — state-backed, tightly regulated and designed to keep monetary sovereignty out of private hands.

Who’s fighting it and who is making the case for it?

Not everyone is convinced. As the legislation advances, opposition from commercial banks has intensified.

At an industry event in Brussels in mid-April, French Banking Federation chairman Daniel Baal took direct aim at the project.

“The retail digital euro, as currently designed, disrupts this balance by turning central bank money into a direct competitor of commercial bank money,” he said.

Wero, the European payments platform backed by major banks, is also wary.

Its CEO, Martina Weimert, acknowledged a use case for offline payments but warned the legal tender status, which would oblige merchants to accept the digital euro just as they must accept cash, would create a “distortion of competition”.

Supporters say the banks are missing the point entirely.

“It’s as if cash did not exist, and the industry argued it was unfair because merchants have to accept it, and users don’t pay a fee,” Peter Norwood, a researcher at Finance Watch, a European non-profit that aims to reform finance in the public interest, told Euronews.

“Cash is a public good. That is what the digital euro is meant to preserve in the digital age.”

Without legal tender status, he argued, the project would never reach critical mass.

“If merchants do not have to accept it, it won’t have a high uptake and will not ensure the continued availability of public money,” Norwood added.

The ECB is trying to minimise tensions over the digital euro by arguing that the private sector will be involved in shaping and managing it.

The bank says commercial lenders will act as the ultimate service providers and will be compensated for doing so.

Opposition to the digital euro, however, extends well beyond the banking sector.

Privacy advocates and decentralisation campaigners have raised concerns that a state-issued digital currency could give governments unprecedented visibility over citizens’ spending — and, potentially, the power to restrict it.

The planned cap on individual holdings has done little to ease those fears.

Crypto industry voices, though a smaller force in Europe than in the US, have also pushed back, wary of a digital currency that competes with decentralised alternatives while operating under full institutional control.

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The man who holds the keys

The fate of the digital euro now rests largely with one person: Fernando Navarrete Rojas, a Spanish centre-right MEP from the European People’s Party (EPP) who is steering the file through the European Parliament, the only EU institution yet to move it forward.

He did not respond to requests for comment from Euronews.

His conduct in parliamentary negotiations, his public speeches and his appearances at industry events all suggest a preference for private-sector solutions over the digital euro.

Navarrete has an extensive background in the banking sector. He held several high-level positions at the Bank of Spain and served as the director of finance at the Spanish Official Credit Institute.

He also led the economic and public policies at the Foundation for Social Analysis and Studies (FAES), a right-wing think tank linked to the former Spanish Prime Minister José María Aznar López.

According to his public meeting records, he held more than a hundred meetings specifically on the digital euro since he took over the file in December 2024.

With EU governments strongly backing the project, the Parliament is where the battle will be won or lost.

At an industry event in mid-April organised by the French Banking Federation, Navarrete was candid about his scepticism, describing the digital euro as not an urgent priority.

“I’m sorry that we started maybe with not the most urgent parts of the building,” he said.

He made it clear he favours the private sector, describing it as “much more efficient”.

And like the commercial banks, he warned that legal tender status, which he called an “atomic weapon,” could fatally undermine private alternatives. “Even if (the digital euro) is no good, you’re forced to use it,” he said.

Behind the scenes

According to several people familiar with the negotiations, the Spanish MEP used closed-door meetings to slow the process down, pushing his views into the text and campaigning hard for a key concession: limiting the digital euro to offline use only, on the grounds that an online version would compete directly with Wero, Visa, Mastercard and other private players.

The meetings grew increasingly polarised.

On one side, the Socialists (S&D), liberals (Renew Europe), the Greens and the Left broadly backed the Commission’s proposal.

On the other, Navarrete — representing the EPP — took an opposing minority stance, occasionally joined by far-right parties, though their attendance was inconsistent.

Two people familiar with the negotiations described his conduct as unpredictable and determined to stall the legislation.

“We are going nowhere,” was the message at the end of several meetings.

German Minister of Finance Lars Klingbeil said in February that those opposing the digital euro were harming Europe — a pointed message aimed at Navarrete and the EPP group, which is divided over the file.

The offline-only position was ultimately dropped from the text, clearing a significant hurdle.

Where do things stand now?

Negotiations are not yet over and remain complex, but the process is moving forward.

Draft texts and meeting minutes seen by Euronews point to a more balanced dynamic than in previous months.

A plenary vote originally scheduled for May has slipped. The parliamentary committee is now expected to vote at the end of June, with the full plenary to follow.

Once the Parliament signs off, interinstitutional negotiations between EU member states, the Parliament, and the Commission will begin, with the final adoption of the legislation targeted for the end of 2026.