In the middle of increasingly widespread use of digital and mobile technology, people are turning more and more to the electronic form of payment which is led to less need for the classic form of money. There are many countries that they found their stronghold in development of digital variants of their own national currencies. The European Central Bank also took the same way as well as other central banks. As response to the increasing demand for electronic form of payment, 2021, together with national central banks, she started development phase of digital euro research which should be completed till the end of 2023. The digital euro represents a form the same value and functionality as the euro we use today. As central bank money, it would be different from private money, and we could pay with it using a phone app or a card. Also, the digital euro would increase the resistance of the euro as a currency to unregulated and unpredictable technological phenomena in the banking and financial sector that could negatively affect the financial stability of the European system. This would make digital euro prosperous stronghold of the monetary system of the euro area and monetary sovereignty would be created, which would strengthen the efficiency of the European payment system. In this paper, with the help of professional and scientific articles and relevant websites of international institutions, the most important issues related to the implementation of the digital euro will be analyzed. The benefits and potential risks of the digital euro will be explored and compared to competing products such as cryptocurrencies. It will also be investigated whether the digital euro will represent an alternative currency of the Eurosystem and what impact it can have on the financial system and central banks.