The digital euro has cleared an important hurdle. This week, the European Parliament’s Economic and Monetary Affairs Committee approved draft legislation for the digital currency, keeping the project on track for a 2029 launch.
The European Parliament is expected to adopt the committee’s position in early July, after which negotiations with EU member states and the European Commission would begin.
The legislation is a key milestone for a project that EU policymakers see as central to strengthening Europe’s financial sovereignty amid the growth of digital payments, the rise of stablecoins, and continued reliance on U.S.-based payment networks.
What Comes Next
While much of the debate has focused on whether Europe needs a digital euro, the legislation provides the clearest picture yet of how the currency would work in practice.
The system would support both online and offline payments. The ECB would provide the underlying infrastructure, while commercial banks and payment service providers would offer digital euro services to customers. Financial institutions are expected to be compensated for their participation, while merchants would pay fees that are expected to be lower than those charged for current card transactions.
To address privacy concerns, the legislation would prohibit the ECB from directly identifying users through their payment data. However, it would allow the European Commission to determine how many digital euros an individual could hold. The digital euro would neither earn interest nor impose costs on users.
Reducing Reliance on the U.S.
The key objective of the project is to reduce the EU’s dependence on U.S.-based payment networks. According to ECB data, Visa and Mastercard account for 61% of card payments in the euro area, including nearly all cross-border card transactions.
The U.S. has moved away from developing a central bank digital currency as stablecoins have gained traction. For EU policymakers, the concern is that most global stablecoins are denominated in U.S. dollars, potentially extending the dollar’s influence over the international financial system.
“The digital euro would give the EU a payment rail that’s not dependent on U.S.-based card networks or private payment platforms,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “That matters because payments infrastructure is increasingly viewed as strategic infrastructure. At the end of the day, Europe wants the ability to move euros digitally under European rules, especially if political and jurisdictional relationships weaken.”
