European Union finance ministers have agreed on a roadmap to advance the long-discussed digital euro, a project designed to reduce Europe’s reliance on US-based payment giants like Visa and Mastercard.

The digital euro—essentially an electronic wallet backed by the European Central Bank (ECB)—has been on the EU’s agenda for years but gained urgency as the bloc seeks greater independence in strategic areas such as energy, finance, and defense. The ECB has promoted the idea as both a counterbalance to US credit card dominance and as a European response to the rise of dollar-pegged stablecoins.

Progress, however, has been slow. Politicians and banks have raised concerns that a digital euro could drain deposits from commercial banks, introduce high costs, or weaken privacy protections. Despite these hurdles, a breakthrough came today in Copenhagen, where EU finance ministers met with ECB President Christine Lagarde and European Commissioner Valdis Dombrovskis.

The ministers reached a compromise that gives them a greater role in shaping the project. They will have a say not only on whether the digital euro is ultimately issued but also on how much individuals will be allowed to hold—an issue central to preventing destabilizing bank runs.

“The compromise that we reached is that before the ECB makes a final decision in relation to issuance… there would be an opportunity for a discussion in the Council of Ministers,” said Paschal Donohoe, chair of the Eurogroup, at a press conference alongside Lagarde and Dombrovskis.

The trio also confirmed an agreement on the procedure for setting the holding limit, though no specifics were disclosed. According to one participant, the ECB will present its proposed cap to the Council of Finance Ministers for approval.

The legislative path ahead remains complex. While the European Commission introduced draft legislation in June 2023, it still requires approval from both the European Parliament and the European Council. The Council hopes to complete its work by the end of this year, with the ECB aiming to have legislation finalized by June. If that timeline holds, the digital euro could be ready for launch in two and a half to three years.

Currently, some EU countries run national digital payment systems, but none operate across the 27-member bloc. Lagarde emphasized that the digital euro would go beyond being a payment method.

“The digital euro is not just a means of payment,” she said. “It is also a political statement about Europe’s sovereignty and its capacity to manage payments—across borders—with a European infrastructure and solution.”

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