Lithuania: the Digital Euro Is Already Treated as Infrastructure

For many people in the euro area, the “digital euro” still sounds like a distant central-bank experiment. In Lithuania, it is increasingly treated as something much more concrete: a piece of future-critical infrastructure that needs to work when other systems fail.

The difference is partly geography and history. Lithuania is a small euro-area country of under 3 million people, bordering both Russia and Belarus. It has lived through cyberattacks, energy disputes and the shock of Russia’s invasion of Ukraine next door. In that context, payments are seen not only as a financial service, but as a national-security issue.

Why Lithuania is paying so much attention

Like more than a dozen euro-area countries, Lithuania does not have its own fully fledged domestic card scheme. Everyday payments run almost entirely over international rails: Visa, Mastercard, Apple Pay and Google Pay.

At EU level, policymakers have become more vocal about this dependence. Estimates suggest that European users collectively pay around €1 billion per year in fees to U.S. card networks just to process payments inside Europe.

For Lithuanian officials and fintech founders, this is no longer seen as a purely commercial choice. It is a question of who ultimately controls the infrastructure that keeps the economy running, especially in a crisis.

What the digital euro actually is

The digital euro is a proposed central bank digital currency (CBDC) for the euro area. It would be issued by the Eurosystem (the ECB plus national central banks), not by commercial banks or private tech platforms. It is meant to complement, not replace, physical cash.

Key design goals under discussion include:

• Universal acceptance in the euro area as a digital means of payment
• Free basic services for individuals (for example, simple transfers and point-of-sale payments)
• Strong privacy protection, with no commercial exploitation of transaction data
• Offline capability, so payments can still be made without an internet or mobile connection
• A framework for limited programmability, for example to automate tax refunds or targeted public transfers

The ECB completed an “investigation phase” in 2023 and is now in a “preparation phase” focused on rulebooks, infrastructure and pilots. Current timelines discussed publicly point to a possible basic infrastructure around 2027 and a decision on full rollout closer to 2028–2030, depending on EU legislation and political approval.

For the ECB, the stated ambition is to create a kind of public digital cash: a neutral platform that private intermediaries can build on, rather than a product trying to replace them.

Lithuania as an early testbed

Lithuania has been unusually active in CBDC experiments. The Bank of Lithuania has run multiple pilots and sandbox projects around blockchain and digital-currency use cases for retail payments.

According to recent coverage, the central bank in Vilnius has already built a demonstration environment showing how a digital euro could work in practice, including:

• Offline payments at the point of sale
• QR-code-based peer-to-peer transfers
• Near real-time tax reporting for merchants

Local fintechs are positioning themselves as the intermediaries that would connect merchants, apps and other payment service providers to this secure European payment infrastructure once the ECB defines APIs and technical standards. Their business model is not to issue the digital euro themselves, but to wrap it in services such as card issuing, acquiring and payout solutions across the EEA.

Bank of Lithuania officials have repeatedly emphasized that the aim is not to compete with private providers, but to give them robust, public “rails” to build on.

Offline functionality: not a gadget, but a fallback

One of the most ambitious elements of the digital euro project is its planned offline mode. The idea is to store value in secure hardware – for example in a chip on a phone, card or other device – and allow two devices to transfer value directly, even without network connectivity. The transaction would later be reconciled when one of the devices comes back online.

ECB documents describe low-value offline transactions as “cash-like” proximity payments, with high levels of privacy and no transmission of transaction data to banks or the Eurosystem beyond what is strictly needed to avoid counterfeiting.

In Lithuania, this is seen as a core resilience feature rather than a niche add-on. If undersea cables are cut, mobile networks fail, or a cyberattack hits major providers, a system that still allows basic payments – buying fuel, food, medicine – could be critical.

The privacy debate

Privacy is the most politically sensitive part of the digital-euro conversation, especially in countries with strong cash cultures like Germany and Austria. Surveys show that many citizens worry that a CBDC could become a tool for state surveillance, even though the ECB has repeatedly stressed that it does not want access to individual transaction data and aims for privacy “as close to cash as possible”, particularly for small offline payments.

The current design discussions revolve around:

• Pseudonymisation of data
• Strict separation between central banks, intermediaries and public authorities
• Legal limits on data retention and access
• “Tiered” privacy, with more anonymity for low-value transactions and more checks for higher-risk activity

Lithuanian fintech practitioners argue that it is technically feasible to combine robust anti-money-laundering controls with strong privacy, and that credible offline functionality would help show that the system is not designed around permanent tracking.

Ultimately, though, trust will depend on the final legislation and on how the system is governed in practice, not just on technical promises.

A European counterweight to Big Tech and global card schemes

The digital euro is also part of a broader European effort to reduce dependence on non-European payment providers. Today, most European card transactions rely on Visa and Mastercard, while Apple and Google control the dominant mobile wallets on many devices.

A widely available digital euro would not automatically displace those players, but it would add a public settlement layer that no single private company controls. In principle, any licensed payment provider could build services on top of it.

This is where Lithuania’s experience is instructive. Its regulators and fintech sector are treating the digital euro as one module in a modular future of money: something that can coexist with cards, bank transfers and private wallets, but that also gives Europe a stronger hand in setting the rules of the game.

How this compares to the U.S. approach

While Europe moves forward with concrete design choices, rulebooks and testing platforms, the United States remains at a much earlier stage. The Federal Reserve has published exploratory work on a possible digital dollar, but officials have emphasized that any move would need clear political backing and legislation from Congress.

In U.S. domestic politics, CBDCs are often portrayed as a potential instrument of government overreach. In Lithuania and other parts of Europe, the framing is different: the digital euro is presented more as an extra option and a resilience tool, not as a compulsory replacement for existing payment methods.

What Lithuania’s approach tells the rest of Europe

Seen from Vilnius, the digital euro is not a speculative bet on a trendy technology. It is a way to:

• Reduce structural dependence on foreign payment infrastructure
• Add a fallback layer that can keep basic transactions running in a crisis
• Give European citizens and businesses a public digital alternative alongside private options
• Create new opportunities for local fintechs to innovate on top of shared rails

For the rest of the euro area, Lithuania is effectively acting as an early laboratory for how a digital euro might work in the real world – and for how to communicate it to a population that knows what it means to have infrastructure suddenly taken away.

Whether or not the project ultimately launches on the current timetable, the Lithuanian debate already points to a useful shift in perspective: away from “Is a digital euro fashionable?” and towards “What happens if Europe doesn’t have this option when it really needs it?”

Sources

• European Central Bank – digital euro investigation and preparation phase documents and FAQs
• Bank of Lithuania – publications and speeches on CBDC experiments and payment resilience
• EU institutions – communications on European payments sovereignty and card-fee dependence
• Public reporting and interviews with Lithuanian fintech companies and officials on the digital euro and offline payments