The European Parliament’s Economic and Monetary Affairs Committee has approved the digital euro, a central bank-backed digital currency designed to reduce the eurozone’s dependence on American-owned payment infrastructure and strengthen European financial sovereignty.
According to EuroNews, the committee’s backing advances a proposal that seeks to address the significant grip US firms currently hold over European payments.
Data from the European Central Bank (ECB) shows Visa and Mastercard collectively handle 61% of all card transactions within the euro area, with the pair processing almost the entirety of cross-border card payments. The approval moves the legislation a step closer to a plenary vote, expected in Strasbourg in early July.
Under the framework, the digital euro would function as a digital form of central bank money, issued and guaranteed by the ECB, intended to sit alongside physical cash and existing banking services rather than supplant them. Consumers would be able to store digital euros in a dedicated wallet, with a holding cap to be determined at a later stage. The system is designed to work for both online and offline transactions and would offer strong privacy protections, with the ECB unable to link payment data back to individual users.
The ECB would be responsible for building and maintaining the core infrastructure, while commercial banks and payment service providers would handle customer-facing services. Merchants would be subject to fees, though these are anticipated to be lower than those currently charged for card payments. Financial institutions taking part in the scheme are expected to receive compensation, though how that compensation model should be structured remains a point of significant disagreement ahead of negotiations with EU member states.
The digital euro is one element of a broader push to assert European strategic autonomy over its financial infrastructure, a conversation that has accelerated in the context of rising geopolitical tensions and the bloc’s acknowledged reliance on foreign-owned systems. The initiative is part of what the EU has framed as a single currency package, which also enshrines euro banknotes and coins as legal tender.
The EU is not the only major economy pursuing a public digital currency. China has already launched its digital yuan, and Russia has announced its digital rouble is set to go live in September 2026. The United States has moved in a contrasting direction: the Trump administration has shelved plans for a Federal Reserve-issued digital currency and is instead promoting stablecoins, privately issued crypto assets pegged to a stable value. Given that the overwhelming majority of global stablecoins are denominated in US dollars, proponents contend the model could extend the dollar’s reach in cross-border payments rather than diminish it. The digital euro, by contrast, is expected to launch by 2029.
The ECB said, “We welcome that the European Parliament’s ECON Committee has agreed on its position on the single currency package, which will safeguard euro cash as legal tender while also shaping the digital euro.”
Italian MEP Pasquale Tridico, who led negotiations on the file for The Left group, said, “The approval of the regulation on the digital euro is a major victory for citizens and small businesses,” describing the committee vote as “historic”.
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