EU Lawmakers Advance Digital Euro Framework With Committee Approval

The European Parliament’s Economic and Monetary Affairs Committee has approved its position on the digital euro package, advancing legislative work on a proposed central bank digital currency that the European Central Bank wants ready for potential issuance by 2029.

The committee said on Tuesday that lawmakers backed the proposal in a 43 to 14 vote. The draft legislation sets out rules for how a digital euro would operate, who could distribute it, and what safeguards would apply to users and financial institutions.

Fernando Navarrete Rojas, a member of the European Parliament, said the proposal preserves consumers’ ability to choose their preferred payment method and described the digital euro as a complement to cash rather than a replacement.

Lawmakers define privacy and payment rules

Under the committee’s proposal, the ECB would issue the digital euro for use across the eurozone through both online and offline payment options.

The draft states that online transactions would rely on an account-based model, while offline payments would use value stored locally on a device. Lawmakers said the offline function would operate similarly to cash because users would permanently lose funds stored on a lost device.

Parliament’s proposal also includes privacy protections built around technologies such as zero-knowledge proofs. The committee said these tools would allow transaction verification without revealing personal information and that the ECB would not have access to users’ identification data.

Lawmakers proposed limits on individual digital euro holdings to reduce risks to the banking system. The European Commission would determine those caps after consulting the ECB and would review them periodically.

The draft prohibits interest payments on digital euro balances. Businesses could hold digital euros only temporarily to collect incoming payments, generally for no longer than 24 hours. Most merchants would need to accept the currency, although certain small businesses and self-employed operators would qualify for exemptions if they do not already accept digital payments.

Basic services, including account access and payments, would remain free under the proposal. Service providers could charge regulated fees for additional features, while offline payments would remain free of charge.

ECB targets launch readiness by 2029

The legislation outlines a distribution framework that includes banks, payment providers, electronic money institutions and regulated crypto firms. Post offices could also participate in distributing the digital euro throughout the eurozone.

Before any launch, the ECB must complete technical standards, conduct testing programs and coordinate implementation with payment providers. The proposal calls for a rollout period of at least two years after final legislative approval.

The committee vote follows several years of preparatory work by the ECB. The central bank began studying a digital euro in 2020 and has repeatedly stated that the project aims to preserve access to central bank money in an increasingly digital payments environment.

ECB Executive Board member Piero Cipollone told European lawmakers earlier this year that technical standards are expected in 2026, with pilot testing planned from 2027. The ECB has said it wants to be technically prepared for a possible launch by 2029 if lawmakers approve the legal framework.

The committee’s approval also comes as European policymakers continue debating the role of private digital currencies. Earlier this month, ECB Executive Board member Isabel Schnabel warned that stablecoins approaching a $300 billion market capitalization could create financial stability risks and strengthen the international position of the U.S. dollar because most circulating stablecoins are dollar-denominated.

At the same time, private-sector projects continue to move forward under the European Union’s Markets in Crypto-Assets framework. In May, banking consortium Qivalis expanded to 37 member institutions across Europe as it prepared a regulated euro-denominated stablecoin targeted for launch in the second half of 2026.