Digital euro is coming: Full control and money with an expiry date?

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Digital euro is coming

Why Europe wants a digital euro

ECB Executive Board member Piero Cipollone renewed the case for the digital euro this week, arguing that Europe risks greater fragmentation as money and financial assets become increasingly digital. Europe still lacks a homegrown digital payment method that works across the entire euro area, while much of its payment infrastructure depends on non-European providers.

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The ECB argues that a common system could reduce that dependence and give European banks infrastructure to compete in digital payments. “Our objective is not to take over the role of banks,” Cipollone said. “On the contrary, the digital euro would equip banks with the infrastructure they need to compete in the digital age and help them expand the reach and use cases of their own solutions.”

The project still requires EU legislation, and the ECB would make a final decision on issuance afterward. A pilot is planned to begin in the second half of 2027, with preparations underway for a potential first issuance in 2029.

Could the digital euro control what you buy?

A €20 banknote does not know who owns it, where it is being spent, or what it is buying. Digital money can theoretically behave differently, with rules determining where, when, or under what conditions it can be used.

Restrictions on how money can be spent are nothing new. Governments already limit some financial assistance to approved medical services or products, while gift cards may work only at particular businesses. But in those cases, the restriction belongs to a particular program or payment product rather than to ordinary money itself.

Digital money could also theoretically come with an expiry date. Some funds could be made usable only for a certain period, potentially encouraging people to spend rather than save. Cash has no equivalent built-in mechanism: a banknote does not lose its value simply because it has been sitting in your wallet for too long.

The ECB says the digital euro will do neither. It will not be “programmable money,” will not expire, and will not contain built-in rules determining where, when, or what people can buy.

But some payments could still be programmed

Although the ECB rejects programmable money, it does want the digital euro to support conditional payments. The distinction is relatively simple: the payment can contain instructions without changing the money itself.

Imagine ordering a new phone online. Instead of paying immediately and then waiting for delivery, the transaction could be arranged so that the money is released automatically once the phone arrives. The digital euros themselves would remain unrestricted, while the user voluntarily sets a condition for that particular transaction.

The ECB has discussed other potential uses, including automatic refunds after travel disruptions and pay-per-use services. In each case, the condition applies to a particular transaction rather than determining how the digital euros can be spent afterward.

What about privacy?

Privacy presents another important difference between cash and digital money. When someone hands a shopkeeper a €20 banknote, no payment company needs to process the transaction. Electronic payments require infrastructure, raising the question of who can see the information they generate.

The ECB says the Eurosystem would not be able to directly identify individual users from their digital-euro payments. Banks and payment providers would still carry out anti-money-laundering and other compliance checks, much as they already do with conventional electronic payments. Offline digital-euro payments are intended to offer greater privacy.

The ECB also says the digital euro would complement rather than replace physical cash. That matters because cash provides privacy partly through its physical nature rather than through a policy decision. A banknote does not need a database to forget who spent it, while privacy protections have to be deliberately built into a digital system.

What happens if the rules change?

The ECB's current position is clear: the digital euro will not expire and will not determine what people can buy. But those protections are ultimately design and policy choices. Governments change, laws change, and technology evolves.

For now, the limits are being drawn before the digital euro even exists. The more interesting question may come years later, when Europe has grown accustomed to using it and decisions have to be made about what the system should, and should not, be allowed to do.

None of that means the digital euro will eventually become programmable money. But as money becomes software, people may increasingly have to consider something a €20 banknote never required them to think about: not only who issues their money, but what their money is technically capable of doing.

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