EU Parliament Committee Approves Digital Euro Framework in 43-14 Vote

The European Union's plan for a central bank digital currency cleared a key hurdle Tuesday. The European Parliament's economic affairs committee voted 43-14 to advance the Digital Euro regulatory framework, moving the project closer to a full floor vote.

The legislation sets the operating rules for a digital version of the euro across the currency bloc. Banks, payment firms, licensed crypto companies, and postal services would all be eligible to distribute it. Citizens would hold the currency in either online accounts or offline wallets stored on personal devices. The offline wallets are designed to work like physical cash – lose the device, lose the money. Online transactions would run through account-based systems managed by authorized providers.

The text requires privacy protections including zero-knowledge proofs, a cryptographic method that verifies transactions without revealing personal data to the European Central Bank. The ECB would run the payment infrastructure but would not be able to identify individual users, the committee said.

European policymakers frame the Digital Euro as a sovereignty play. Visa and Mastercard process 61% of card transactions inside the euro area and dominate nearly all cross-border card payments. Lawmakers want a publicly-run alternative that keeps payment oversight inside European jurisdiction.

The digital currency is meant to complement cash and commercial bank deposits, not replace them. The European Commission would set maximum wallet balances after consulting the ECB and would review the limits periodically. No interest would accrue on holdings, a design choice meant to stop the Digital Euro from competing too aggressively with bank deposits. Merchants could hold incoming payments for up to 24 hours. Most retailers would have to accept the digital currency, though small businesses and freelancers could opt out.

The ECB still needs to finalize technical specs, run tests, and set up coordination with providers. Officials expect to release technical rules through 2026 and launch pilot programs in 2027. The goal is full technical readiness for a potential rollout by 2029.

The legislation gives member states at least two years to implement the system after final approval. Basic account access and standard payments would be free. Providers could charge regulated fees for extra features. Offline transactions would carry no fees at all.

The full parliament is expected to vote in early July in Strasbourg. That would trigger negotiations among all 27 member states. Lawmakers want a final agreement on the Digital Euro package before the end of 2026.

The timeline is not academic. Dollar-pegged stablecoins continue to gain market share, and the MiCA stablecoin rules take full effect in seven days. Europe's window to establish its own digital payment rail is narrowing, and Tuesday's vote suggests the political will is there to push through.