ECB Digital Euro Advances After Securing Key European Parliament Approval

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EU lawmakers have approved a legal framework paving the way for a European Central Bank (ECB) digital euro by 2029, aimed at reducing the bloc’s reliance on dominant U.S. card networks and stablecoin issuers.

The European Central Bank secured a key milestone after the European Parliament’s Economic and Monetary Affairs (ECON) committee voted on Tuesday to advance the proposed legislation for a digital euro.

The committee also authorized the start of “trilogue” negotiations between EU member states and the Parliament, moving the process toward final agreement on the law.

The decision concludes three years of debate between central bankers and commercial banks, which had raised concerns over potential losses in deposit revenues.

The initiative is primarily aimed at strengthening Europe’s monetary sovereignty rather than simply modernizing payments. ECB President Christine Lagarde has consistently supported a central bank digital currency to counter the growing influence of U.S. dollar-backed stablecoins such as Tether’s USDT and Circle’s USDC.

Lagarde has also sought to address privacy concerns, emphasizing that cash will remain in circulation and that digital euros are intended to complement, not replace, physical currency.

EU officials have additionally pointed out that nearly two-thirds of eurozone card transactions are processed by non-European providers, mainly Visa and Mastercard.

Markus Ferber, a senior member of the ECON committee, said strengthening Europe’s payment infrastructure has become a geopolitical priority, arguing that the region cannot remain dependent on a small number of foreign payment networks.

The approved framework would allow the ECB to introduce both online and offline versions of the digital euro by 2029. The offline feature is designed to enable direct transfers between devices without internet access, offering cash-like privacy protections by limiting transaction visibility even for the central bank.

The move comes shortly after the U.S. Senate approved a four-year ban on central bank digital currencies, with the proposal now heading to the House of Representatives.

Commercial banks have also pushed for strict limits on digital euro holdings to prevent large-scale withdrawals from traditional deposit accounts during periods of financial stress.

The ECB will now begin a 12-month pilot phase, testing a beta version of the system with selected merchants and payment providers.

As Ferber summarized, “The euro must work in your pocket and on your phone.”