The European Parliament's economic committee gave its backing to draft legislation for a digital euro on Tuesday, marking a significant step toward the bloc's goal of reducing its reliance on U.S. payment networks. The vote, which follows three years of talks between the European Central Bank and commercial lenders, clears a path for formal negotiations on the legal framework that will underpin the central bank digital currency (CBDC).
Officials say the project is vital for the eurozone's monetary sovereignty. Currently, nearly two-thirds of all card payments in the area are processed by non-European companies, primarily Visa and Mastercard, as well as mobile wallets like Apple Pay and Google Pay. The digital euro would create a domestic alternative, allowing citizens to hold a separate virtual wallet—accessible through a bank or public institution—that can be topped up from existing accounts or cash deposits, then used for in-store, online, or peer-to-peer payments via card, app, or phone.
Privacy is a cornerstone of the design: transactions will not be traceable, and an offline mode will function much like physical cash. Alessandro Giovannini, advisor to the digital euro director at the ECB, stressed that the new currency would not replace cash or existing payment methods but would simply add another option.
The drive to launch the digital euro gained political momentum following Washington's 2025 sanctions against International Criminal Court judges, which EU lawmaker Gilles Boyer called a stark reminder of how payment systems can be wielded as “instruments of power”. French ICC judge Nicolas Guillou reportedly lost access to his Visa card after those sanctions. With thirteen of the twenty-one eurozone countries lacking a national card scheme for everyday purchases, the CBDC is seen as a way to shield European transactions from extraterritorial pressure.
Europe's banking sector, however, has pushed back. The European Banking Federation estimates the adaptation costs could reach 18 billion euros, while the ECB puts the figure at between 4 and 5.8 billion euros. Banks also fear deposit outflows as customers shift money into digital euro wallets. The ECB maintains that safeguards built into the system will prevent large‑scale flows, even in a crisis scenario.
If EU member states and the full Parliament adopt the final rules by the end of 2026, the ECB intends to launch a pilot program by mid‑2027, with a full public rollout targeted for 2029. The digital euro was first proposed by the ECB in 2020, and the legislative process began in earnest after the EU’s formal proposal.
