European Parliament Committee Backs Digital Euro, Targets 2029 Launch

The European Parliament's economic committee has endorsed a digital euro, paving the way for a central bank digital currency (CBDC) that the European Central Bank aims to launch by 2029. The committee voted on Tuesday to approve the legislative framework, backing a currency designed to reduce Europe's reliance on US-controlled payment networks such as Visa and Mastercard.

The proposed digital euro would allow consumers to hold the currency in a dedicated wallet, subject to a holding limit yet to be determined. The system supports both online and offline payments and offers high privacy protections, with the ECB unable to directly identify users from payment data.

Key features of the digital euro proposal

The ECB would build and maintain the underlying infrastructure, while commercial banks and payment service providers would distribute digital euro services to customers. Financial institutions are expected to receive compensation for participation, and merchants would pay fees lower than current card transaction costs.

• Consumers hold digital euros in wallets with a capped balance (amount not yet specified).
• Offline payments are supported for privacy and accessibility.
• The ECB cannot directly trace transactions to individual users.
• Commercial banks and payment firms act as intermediaries.
• Merchant fees are designed to undercut existing card network charges.

Contentious compensation negotiations ahead

How to structure compensation for financial institutions remains a major sticking point. Three sources familiar with the discussions told Euronews that this issue is one of the most contentious ahead of negotiations with EU member states.

The European Parliament is expected to formalize the committee's position during a plenary vote in Strasbourg in early July. After that, negotiations with the EU's 27 member states will begin, with lawmakers aiming to reach a final agreement before the end of the year.

Privacy advocates have raised concerns about government surveillance potential, warning that a digital euro could enable authorities to freeze accounts or monitor spending. The ECB has emphasized that the design prevents it from seeing individual transactions.

If approved, the digital euro would be one of the largest CBDC rollouts globally, affecting 340 million EU citizens. The ECB has been researching the project since 2021 and is now moving toward implementation.