The European Parliament's Committee on Economic and Monetary Affairs has voted 43-14 to approve its negotiating position on the digital euro, advancing the bloc’s central bank digital currency (CBDC) project. The legislation establishes the digital euro as an electronic form of central bank money that complements physical cash, with strict privacy protections and holding limits designed to safeguard financial stability.
Privacy remains a central concern. The proposal mandates “privacy by design” and “privacy by default”, incorporating zero-knowledge proofs and other advanced cryptographic techniques so transactions can be verified without exposing personal data. The European Central Bank (ECB) will not have access to users’ identification details. Offline payments will function like cash, directly between devices, though users bear the risk of losing funds if their device is damaged.
To prevent large-scale shifts from commercial bank deposits, the committee supports limits on individual holdings—the exact cap will be set by the European Commission on the ECB’s recommendation, with reviews every two years. Digital euro balances will not pay interest or incur charges. Businesses generally cannot hold digital euros beyond 24 hours of incoming payments.
The distribution model is broad: banks, electronic money institutions, post offices, and even regulated crypto-asset service providers may offer digital euro services. Most merchants accepting electronic payments will be required to accept it, with exemptions for small businesses. Basic services will be free, while offline payments will carry no fees.
The ECB must first complete testing, including a rulebook, infrastructure, and pilot programs. Once authorized, there will be a minimum 24‑month implementation period for banks, providers, and consumers to prepare. Lawmakers also stressed that the ECB’s operational role for the digital euro must remain separate from its monetary policy functions. In parallel, rules to preserve cash access require euro area states to ensure sufficient availability and contingency plans for digital outages.
Banca d’Italia confirmed the approval, noting that negotiations among European institutions aim to finalize the framework by 2026, with a possible issuance in 2029. The move aligns with global trends as central banks explore digital currencies to modernize financial systems.
