The European digital currency is expected to be introduced by 2029, as part of an effort to strengthen European autonomy in payment systems and reduce the dominance of the US dollar in the global economy.
The European Parliament’s Economic and Monetary Affairs Committee approved the long-awaited digital euro project on Tuesday, as the European Union aims to reduce its dependence on US-controlled payment systems.
According to data from the European Central Bank (ECB), American payment giants Visa and Mastercard account for around 61% of card payments in the euro area, as well as almost all cross-border card transactions.
The debate over Europe’s financial sovereignty has intensified amid geopolitical tensions and concerns about the EU’s dependence on foreign payments infrastructure.
The digital euro is one of the measures to strengthen Europe’s strategic autonomy. It would be a digital form of central bank money, issued and guaranteed by the ECB, and designed to complement existing cash and banking services, not replace them.
According to the proposal, citizens will be able to hold digital euros in a special electronic wallet, with a holding limit that has not yet been determined.
The system will support both online and offline payments and aims to offer a high level of privacy, where the ECB will not be able to directly identify users from payment data.
The ECB will provide the basic infrastructure, while commercial banks and payment service providers will offer digital euro services to customers. Financial institutions are expected to be compensated for participating in the system, while merchants will pay fees that are expected to be lower than those for current card transactions.
How this compensation will be structured remains one of the most contentious issues ahead of negotiations with EU member states, according to three sources familiar with the discussions, euronews reports.
“We welcome that the European Parliament’s ECON Committee has agreed its position on the single currency package, which will protect the physical euro as legal tender while also shaping the digital euro,” the ECB said in a statement.
“The adoption of the digital euro regulation is a major victory for citizens and small businesses,” said Italian MEP Pasquale Tridico, who negotiated the file on behalf of the Left group, calling the vote “historic.”
The European Union is not alone in developing a public digital currency. China has already introduced the digital yuan, while Russia has announced that the digital ruble will become operational in September 2026.
The United States has taken a different approach. US President Donald Trump has abandoned plans for a central bank digital currency and has supported the development of “stablecoins” – private crypto assets designed to store a stable value.
Since the majority of global stablecoins are denominated in US dollars, supporters argue that this technology could strengthen the international role of the dollar and its use in cross-border payments.
However, some policymakers and former officials believe that a US digital currency could be back on the agenda in the future.
Timothy Massad, former chairman of the Commodity Futures Trading Commission (CFTC), told CoinDesk in May that discussions in Washington are ongoing and that a digital dollar could become inevitable.
The European Parliament is expected to formalize the committee’s position in a plenary vote in Strasbourg in early July.
Negotiations will then begin with the 27 EU member states, with the aim of reaching a final agreement by the end of the year. /Telegraph/