EU Parliament committee approves digital euro: Goal is to increase Europe's autonomy in payments

The European Parliament's Committee on Economic and Monetary Affairs has approved the digital euro regulation, which has long been on the European Union's agenda. The decision is seen as one of the key steps in the EU's goal to reduce its dependence on US-based payment systems and strengthen its strategic autonomy in payments.

According to data from the European Central Bank (ECB), Visa and Mastercard handle 61 percent of card payments in the euro area and almost all cross-border card transactions. In a period of rising geopolitical tensions, this picture has accelerated discussions on financial sovereignty in Europe.

HOW WILL THE DIGITAL EURO WORK?

The digital euro will be a digital form of central bank money issued and guaranteed by the ECB. The purpose of the regulation is not to eliminate cash or existing banking services, but to create a publicly backed payment option that complements them.

According to the draft, users will be able to hold the digital euro in a special wallet. However, the upper limit on how much digital euro can be held in wallets has not yet been clarified. The system will allow for both online and offline payments.

Privacy is also one of the prominent topics in the regulation. According to the planned structure, the ECB will not be able to directly identify users through their payment data. The ECB will provide the infrastructure, while commercial banks and payment service providers will offer the service to citizens and businesses.

Financial institutions are expected to be compensated for their participation in the system. The fees to be paid by businesses are projected to be lower than the fees in current card transactions. However, how this compensation structure will be shaped remains one of the controversial topics before the negotiations with member states.

We welcome that the European Parliament's ECON Committee has reached a consensus on its position regarding the common currency package that will shape the digital euro while preserving the status of euro cash as legal tender.

Pasquale Tridico, an Italian Member of the European Parliament who negotiated the file on behalf of The Left group, described the vote as "historic" and said the regulation is a "great victory" for citizens and small businesses.

The EU is not the only actor developing a publicly backed digital currency. China has implemented the digital yuan, and Russia has announced that the digital ruble will become operational in September 2026. In the US, President Donald Trump has shelved plans for a central bank digital currency to be issued by the Federal Reserve while supporting stablecoins issued by the private sector.

The European Parliament is expected to formalize the committee's position with a plenary vote to be held in Strasbourg in early July. Negotiations with the 27 EU member states will then begin. Lawmakers aim to reach a final agreement by the end of the year; the digital euro is expected to be launched by 2029.

News Source: 12punto