Europe Advances Digital Euro as US Senate Blocks Fed CBDC

The European Parliament's Economic and Monetary Affairs Committee voted June 23 to advance legislation for a digital euro, pushing the EU closer to a central bank digital currency launch that could come by 2029. The same week, the U.S. Senate voted 85-5 to block the Federal Reserve from creating a CBDC before 2031.

The committee vote locks in the legislative framework the European Central Bank needs to move from research to deployment. The ECB has argued the digital euro would reduce the bloc's reliance on foreign payment rails. Data cited by the central bank shows Visa and Mastercard handle 61% of card payments in the euro area and nearly all cross-border card transactions.

Under the proposal, consumers would hold digital euros in dedicated wallets. The ECB would run the core infrastructure; banks and payment providers would manage customer-facing services. The system is designed to support both online and offline payments with privacy safeguards, the committee said. Holding limits for wallets have not been finalized and remain under negotiation among European institutions.

The ECB has repeatedly said the digital euro is meant to complement physical cash, not replace it. Following the vote, the central bank welcomed the outcome, stating that the Parliament's position supports both preserving euro cash as legal tender and developing a digital version of the currency.

The U.S. is moving in the opposite direction. The 21st Century ROAD to Housing Act, passed 85-5 in the Senate, includes a provision barring the Fed from issuing a CBDC or similar asset before the end of 2030. The Senate's position aligns with President Trump's preference for privately issued stablecoins over a Fed-backed digital currency.

U.S. lawmakers continue to work on crypto-specific legislation. The CLARITY Act, which would establish a clearer regulatory framework for digital assets, remains under consideration as Congress debates the future structure of the country's crypto market.

In Asia, the Bank of Korea is also exploring digital finance. Governor Shin Hyun-song said in his April inaugural speech that the central bank would support innovation in blockchain-based finance while maintaining the stability of South Korea's payment and settlement systems. He added that the bank would work to strengthen the won's role in an increasingly digital financial environment.

Mastercard, which handles a majority of euro-area card payments, faces a direct competitive threat from a public digital payment option. The company's Alpha Score sits at 62/100, a Moderate label reflecting the uncertainty around how a digital euro would reshape the European payments landscape.