Decisions on the design and availability of the planned “digital euro” will be made in September, Paschal Donohoe has said.
Speaking to reporters in Clonmel, Co Tipperary, on Wednesday, the Fine Gael Minister and Eurogroup president said the aim was to ensure the euro’s stability and strengthen its role in Europe’s economic growth.
“In that spirit, I’d highlight decisions that I hope will be making in September, regarding the digital euro, and that our currency can have a digital future,” Donohoe said. “I think [it] would be a really important element of the future of our currency.”
He said the project, which has been in development for several years, would allow people to make certain transactions directly using the digital euro, without relying solely on cash or other payment systems.
“That is a project we’ve been working on for a number of years,” he said. “In the second half of this year, we will be making important decisions regarding the design of it, and its availability in the years ahead. It will never take the place for cash though.”
A digital euro would be an official, electronic form of the euro issued directly by the European Central Bank (ECB), with each unit backed and guaranteed by the ECB itself. It would hold the same value as physical euro notes and coins, meaning that €1 in digital form would always equal €1 in cash. Unlike private digital payment services, it would be part of the central bank system, offering a direct claim on the ECB rather than on a commercial bank.
The ECB has stressed that the digital euro would be designed to complement, not replace, physical cash, with euro notes and coins remaining in circulation. One of its proposed features is the potential for offline use, allowing people to make transactions without an internet connection – a function aimed at ensuring accessibility during outages or in remote areas.
Supporters argue that such a currency could provide a safer, more stable alternative to private-sector payment systems and cryptocurrencies, which can fluctuate sharply in value and may be controlled by non-European providers.
By being issued and regulated under EU monetary policy, a digital euro would avoid the volatility of crypto-assets and reduce reliance on payment platforms based outside the eurozone.
The European Commission and ECB have pointed to several reasons for advancing the project now. These include the decline in cash use across much of Europe, the rapid growth of cryptocurrencies, and the emergence of central bank digital currencies in other major economies such as China. Officials say the EU must ensure it remains competitive in this area and retain control over its currency in the digital age.
Concerns about the digital euro have focused on issues such as privacy, with critics warning it could enable authorities to track spending in detail if strong anonymity protections are not put in place.
Some commercial banks have also raised fears that large movements of funds from bank accounts into the central bank system could weaken their ability to lend, particularly during periods of market stress.
Cybersecurity is another challenge, with a centralised digital currency potentially becoming a high-value target for hackers and state-sponsored cyberattacks. Economists have also cautioned that in a crisis, the ease of moving money into a perceived “safe” central bank account could accelerate bank runs.
Others point to the cost and complexity of building and maintaining the system, ensuring it functions seamlessly across the eurozone, and integrating offline capabilities without security compromises.