European Parliament Committee Advances Digital Euro Framework

The European Parliament’s Economic and Monetary Affairs Committee has approved the legal framework for a digital euro, clearing a key step toward a central bank digital currency in the European Union. The committee also mandated immediate trilogue negotiations between EU member states and Parliament to finalize the law.

The vote matters because EU officials and the European Central Bank have framed the digital euro as a sovereignty issue as much as a payments upgrade. The ECB and its president, Christine Lagarde, have argued that Europe needs its own digital money infrastructure to limit dependence on U.S. dollar-pegged stablecoins such as USDT and USDC, as well as foreign card networks.

According to the source, EU policymakers have pointed to the fact that nearly two-thirds of card transactions in the eurozone are processed by non-European companies, mainly Visa and Mastercard. That dependency has become a sharper policy concern as digital payments, stablecoins and geopolitical risk increasingly overlap.

The framework would allow the ECB to introduce both online and offline versions of the digital euro by 2029. The offline version is designed to support phone-to-phone payments without an internet connection and to offer cash-like privacy by preventing the ECB from seeing what citizens buy.

Commercial banks won a key safeguard in the proposed rules: strict limits on how much users can hold in a digital euro wallet. Those caps are intended to reduce the risk that funds would rapidly leave traditional bank accounts during periods of stress.

The ECB is now expected to run a 12-month pilot using a beta version of the system with selected merchants and payment service providers. The trial will test whether the infrastructure can work in real-world payment settings before any broader rollout.