EU lawmakers approved draft rules for the digital euro, targeting Visa and Mastercard dominance. Banks oppose the plan, citing 18 billion euros in costs.
The European Central Bank moved a step closer to launching a digital euro after the European Parliament's economic committee approved draft legislation Tuesday. The vote opens formal talks on the legal framework for the project, which the ECB sees as essential to the bloc's payment independence.
Roughly two-thirds of card transactions in the euro area run through non-European networks, mostly Visa and Mastercard. The digital euro is designed to offer an alternative routed through European infrastructure, reducing that reliance.
The ECB first floated the idea in 2020. The current legislative package still needs approval from EU member states and the full parliament before it becomes law.
Under the plan, citizens would hold digital euros in virtual wallets issued by banks or public entities like postal services. Wallets could be funded from regular accounts or cash. Transactions would work at shops, online, or person-to-person via cards or phones.
Privacy protections are a central feature. Offline transactions would be anonymous, like cash. Online transaction histories would not be traceable, officials said.
"This won't eliminate existing options. Physical currency will remain accessible, and individuals can continue using established private payment solutions," said Alessandro Giovannini, an advisor to the ECB's digital euro director.
Lawmaker Gilles Boyer described payment networks as "tools of influence," pointing to Washington's 2025 sanctions on International Criminal Court officials as an example of how U.S. financial systems can become geopolitical leverage. French ICC magistrate Nicolas Guillou said he lost access to his Visa card after those sanctions took effect.
Thirteen of 21 eurozone countries lack domestic card payment infrastructure for everyday transactions, according to EU data.
The main opposition comes from European banks. The European Banking Federation estimates adaptation costs at 18 billion euros. The ECB puts the figure at 4 billion to 5.8 billion euros.
Banks also worry that customers will shift deposits into digital euro wallets, shrinking their funding base. The ECB said the system includes safeguards to prevent large-scale outflows, even during a crisis.
If EU negotiators finalize the rules by late 2026, the ECB plans to begin pilot testing in mid-2027, with full public rollout targeted for 2029.
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