The Council of the European Union has backed the rollout of the European Central Bank’s digital euro in two formats: a standard online version and a privacy-oriented offline option.
In a document published on Friday, the council outlined its official position on the digital euro project, confirming its alignment with the ECB’s plan to introduce both online and offline versions at the same time. The move marks an important step forward in the EU’s efforts to modernize its payments system while addressing privacy concerns.
ECB President Christine Lagarde emphasized that the next phase of the digital euro initiative now depends on EU lawmakers. She noted that it will be up to the European Council and, later, the European Parliament to assess whether the European Commission’s proposal is adequate and determine how it should be turned into legislation or amended.
Limits of the offline digital euro
The offline version of the digital euro is designed to enable in-person payments by allowing approved devices to exchange ECB-issued digital tokens without an internet connection. These transactions would rely on close physical proximity between devices, similar to contactless payments.
However, enforcing proximity in a purely digital environment presents challenges. Experts warn that so-called relay attacks — where attackers use proxy devices to extend near-field communication (NFC) signals over the internet — could undermine proximity requirements. This makes it difficult to fully prevent non-local or advanced misuse of offline transactions.
An expert opinion from the European Data Protection Board acknowledged these risks, stating that available countermeasures are limited. The board concluded that physical proximity, a defining feature of cash, cannot be reliably guaranteed in a digital currency system.
Privacy-focused, but not the same as cash
While the offline digital euro is intended to offer enhanced privacy, it will not replicate the anonymity of physical cash. Digital euro balances and the private cryptographic keys used to manage them would be stored in secure elements of certified devices, such as smartphones or smart cards.
This design aims to strike a balance between user privacy, security, and regulatory oversight, ensuring compliance with EU rules while offering consumers an alternative digital payment option.
