The EU’s long-awaited digital euro has cleared an important stage in the European Parliament, as Brussels seeks to strengthen Europe’s control over payments and reduce its dependence on US-dominated card networks. The European Parliament’s Economic and Monetary Affairs Committee approved its negotiating position on Tuesday, opening the way for talks with EU member states on a project that could reshape how citizens and businesses make everyday payments across the bloc.
The main legislative file establishing the digital euro was approved by 43 votes in favour, 14 against and one abstention. MEPs also backed two related files, one covering the distribution of the digital euro by payment service providers based in EU countries outside the eurozone, and another safeguarding the legal tender status of euro banknotes and coins. The vote does not amount to final approval, but it gives Parliament a mandate to enter negotiations with the Council of the EU, once the position is formally announced at the July plenary session in Strasbourg.
A push for payment sovereignty
The proposal comes as the EU places greater emphasis on financial sovereignty and strategic autonomy. According to European Central Bank data cited by Euronews, Visa and Mastercard account for 61% of card payments in the euro area and almost all cross-border card transactions. That reliance has become more politically sensitive as geopolitical tensions have increased and policymakers have turned their attention to critical infrastructure controlled by non-European companies.
The digital euro would be a digital form of central bank money, issued and backed by the ECB. It is designed to complement cash and existing banking services, not replace them. Consumers would be able to hold digital euros in a dedicated wallet, subject to a holding limit that has not yet been set, and use them for both online and offline payments. Online transactions would be account-based, while offline payments would take place directly between local devices using stored funds.
How it would work
The offline function is one of the most politically significant elements of the plan because it is intended to work more like cash. Payments could be made without an internet connection, while money stored offline on a device would be treated in a similar way to physical notes and coins. If the device were lost, the funds stored on it would also be lost, with no reimbursement foreseen under the proposal.
Privacy has been presented as a central safeguard. The Parliament says the digital euro would be built around the principles of privacy by design and privacy by default, using technologies such as zero-knowledge proofs to allow transactions to be verified without revealing personal data. The ECB would provide the underlying infrastructure but would not have access to information identifying individual users. Commercial banks and payment service providers would be responsible for offering digital euro services to customers.
Who would use it
A wide range of providers would be allowed to distribute the digital euro across the EU, including banks, electronic money institutions, postal services and licensed crypto-asset service providers. Most businesses would be required to accept it, although exemptions would apply to self-employed people and small or micro-businesses that do not already accept other forms of digital payment. The system would also be available to visitors and tourists, as well as, under certain conditions, people living outside the eurozone.
Basic services would be free of charge for users. These would include opening an account, holding and managing funds, and access to at least one payment method. Offline transactions would also be free. Merchants are expected to pay fees, although these are intended to be lower than those linked to current card payments. Compensation for banks and payment providers remains one of the more sensitive issues ahead of negotiations with member states.
Limits and safeguards
To limit risks to financial stability, individuals would face a cap on the amount of digital euro they could hold. MEPs propose that the limit should be set by the European Commission, following a recommendation from the ECB, and reviewed at least every two years. Businesses would not be allowed to keep digital euro balances beyond the collection of incoming payments for up to 24 hours, a measure intended to prevent the system from drawing large deposits away from commercial banks.
Before the digital euro can be introduced, the ECB would need to complete the rulebook, build the necessary infrastructure and carry out pilot testing. Once the legislation is approved, a transition period of at least 24 months would follow to allow banks, payment providers, businesses and users to adapt. The project is expected to launch by 2029, according to Euronews, although the final timetable will depend on the legislative process and technical preparations.
Cash remains part of the plan
The ECB welcomed the committee vote, saying the package would safeguard euro cash as legal tender while also shaping the digital euro. Pasquale Tridico, the Italian MEP who negotiated the file on behalf of The Left group, described the vote as historic and said the approval of the regulation was a major victory for citizens and small businesses. Parliament’s rapporteur, Fernando Navarrete Rojas of the European People’s Party, said the digital euro would complement cash rather than replace it, while offering a safe, resilient and European digital payment option with built-in privacy safeguards.
Alongside the digital euro file, MEPs also approved legislation aimed at protecting the use of euro cash. Eurozone countries would have to ensure access to banknotes and coins, prepare for disruptions to digital payment systems and monitor cash availability, especially for older people, low-income citizens and those without bank accounts. Businesses would not be allowed to reject cash through signs or standard contractual terms.
Europe joins global race
The EU is not alone in developing a public digital currency. China has already introduced its digital yuan, while Russia has announced that its digital rouble will become operational in September 2026. The United States has taken a different route, with President Donald Trump abandoning plans for a Federal Reserve-issued central bank digital currency and backing the development of stablecoins, privately issued crypto assets designed to maintain a stable value.
Because most global stablecoins are denominated in US dollars, supporters argue they could further strengthen the dollar’s role in international payments. For Europe, the digital euro is therefore not only a consumer payment project, but also part of a wider effort to ensure that the eurozone has its own public digital payment infrastructure. The three negotiating mandates are expected to be announced at the start of the July plenary, with lawmakers aiming to reach a final agreement with member states before the end of the year.
With information from CNA and Euronews
