This contribution was delivered on 5 May 2022 on the occasion of the hybrid 2022 edition of EUI State of the Union on ‘A Europe fit for the next generation?' EU Member States have adopted several initiatives to establish a legal and technical framework for digital identity. The European Commission has facilitated this development by offering guidance and promoting interoperable solutions through frameworks such as eIDAS and solutions developed within the European Interoperability Framework. At the same time, two years of COVID-19 pandemic have led at once to an acceleration of digital identity projects, and mounting concerns that widespread data collection and availability can lead to the risk of privacy violations, citizen profiling and mass surveillance. This session will explore the opportunities and challenges of emerging digital identity and digital payments, including the privacy, security concerns as well as the outstanding opportunities for inclusive growth, resilient and sustainable solutions for the society of the future. The discussion will also cover emerging attempts to develop joint European solutions for digital identity, including the recent joint declaration between the governments of Finland and Germany to support the progress of the proposed regulation on European digital identity, and to accelerate the development of joint European solutions based on digital identity.