EU Parliament gives first green light to digital euro

The European Parliament gave its first substantive political backing to the creation of a digital euro, endorsing the Council’s negotiating mandate for a central bank digital currency usable both online and offline.

The vote marks a pivotal step in the legislative process. Without Parliament’s approval, the European Central Bank cannot issue the new public currency. 

While Frankfurt continues to signal 2029 as a possible launch date, the timetable now hinges on negotiations between Parliament and the Council.

From caution to compromise

The vote marks a shift from earlier cautious positions that favoured offline-only models. The current compromise balances monetary sovereignty, citizen protection, and financial stability.

Three concerns dominated the debate: privacy, banking stability and financial inclusion.

Privacy proved the most politically sensitive issue. MEPs sought safeguards against the risk of systematic tracking of transactions. The compromise provides for offline payments offering a level of privacy comparable to cash, while online transactions will remain subject to existing anti-money laundering rules. 

The ECB would not have direct access to personal transaction data beyond what is strictly necessary.

Banking stability was another sticking point. Several lawmakers warned that large-scale transfers of deposits into digital euro wallets could weaken commercial banks’ funding base. 

To mitigate this risk, the proposal foresees caps on individual holdings and a non-competitive remuneration structure to discourage large-scale shifts of liquidity.

Financial inclusion also featured prominently. Parliament insisted that the digital euro must be universally accessible, including offline functionality, to ensure elderly citizens and less digitally proficient users are not excluded from the payments system.

Strategic infrastructure for the euro

Beyond technical design, the digital euro is increasingly framed as a strategic project. 

Supporters argue it would safeguard access to public money in an increasingly digital economy while reducing Europe’s dependence on non-European payment providers.

With geopolitical tensions rising and transatlantic economic relations becoming more uncertain, lawmakers emphasised the need for a resilient and integrated European retail payment infrastructure.

The vote confirms that the digital euro would operate both online and offline and contribute to deeper integration of the EU payments market. 

MEPs also called on the ECB to monitor developments in crypto-assets closely, warning that leaving digital payments entirely to private, often non-European actors could create new strategic dependencies and financial fragmentation.

While the legislative process is far from complete, the vote breaks more than two years of political deadlock. The digital euro now moves from planning to negotiation, with the goal of becoming an operational tool for EU economic policy.