The Council of the European Union has formally endorsed the European Central Bank’s proposed design for the digital euro, backing the simultaneous launch of both online and offline versions of the central bank digital currency.
In a policy position document released on Friday, the EU Council aligned itself with the ECB’s approach, confirming that the digital euro should be available in two forms from day one. The move marks an important step in the legislative process, though final approval remains in the hands of EU lawmakers.
European Central Bank President Christine Lagarde underlined that the next phase now depends on political institutions. She said it would be up to the European Council and later the European Parliament to assess whether the European Commission’s proposal is satisfactory and how it should be transformed into legislation or amended.
The digital euro project has been positioned as a public digital payment option that complements cash rather than replacing it. EU officials have repeatedly stressed that cash will continue to exist alongside the digital euro, even as electronic payments grow across the bloc.
How the offline digital euro would work
Documents referenced in the Council’s position outline how the offline digital euro is intended to function with privacy features that go beyond most existing digital payment systems. The design aims to prevent transaction data from being shared beyond the parties directly involved in a payment.
Under the proposed system, certified devices such as mobile phones or smart cards would be able to exchange central bank signed digital euro tokens during in person transactions. The transaction data would not pass through intermediaries or be stored on centralized servers, a feature meant to mirror the privacy characteristics of cash.
However, technical limitations remain. The documents acknowledge that enforcing physical proximity in offline payments is difficult in practice. A relay attack, where an attacker places proxy devices near both the sending and receiving parties to extend near field communication over the internet, would be hard to prevent completely. This makes it challenging to fully restrict non proximity usage by advanced users.
An expert opinion from the European Data Protection Board reinforces these concerns. The board stated that available countermeasures against such risks are very limited. It concluded that physical proximity cannot be considered a property of cash that can be reliably enforced in a digital currency, even with offline functionality.
Private, but not the same as cash
While the offline digital euro is designed to offer a high level of privacy, EU institutions have stopped short of equating it fully with physical cash. The private keys used to manage offline digital euro holdings would be stored in secure elements within certified devices, including mobile phones and smart cards.
This approach aims to strike a balance between user privacy, security, and regulatory requirements. Unlike cash, which leaves no digital footprint, the digital euro would still operate within a regulated framework overseen by European authorities.
The Council’s endorsement signals growing political momentum behind the digital euro, but it does not guarantee immediate deployment. Legislative negotiations with the European Parliament are expected to shape the final form of the digital euro, including limits, safeguards, and governance rules.
For now, the EU’s backing of both online and offline versions confirms that privacy and accessibility remain central pillars of the digital euro strategy as Europe moves closer to issuing a public digital currency.
Read Also: ETHZilla Sells Ether Holdings to Redeem Convertible Debt Amid Market Weakness
