Digital Euro Takes Major Step Forward After Crucial EU Vote

TLDR

• The European Parliament’s ECON committee approved the digital euro package with a 43-14 vote.
• The proposal advances legislative preparations for a potential digital euro launch in 2029.
• Lawmakers said the digital euro would complement cash rather than replace it.
• The framework allows both online and offline digital euro payments.
• Offline transactions would use local device storage and function similarly to cash.

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The European Parliament’s Economic and Monetary Affairs Committee moved the digital euro proposal forward on Tuesday. Lawmakers approved the committee’s position with a 43-14 vote, and they cleared another legislative step. The decision supports ongoing preparations for a potential launch of the central bank digital currency in 2029.

Digital Euro Proposal Moves Through Parliament

The committee backed rules that would govern the future digital euro across the eurozone.

The proposal assigns issuance responsibilities to the European Central Bank. It also allows both online and offline payments under the planned framework. Lawmakers outlined separate systems for each payment method.

Online transactions would rely on an account-based structure. Offline payments would use local device storage and offer cash-like functionality. The approved text states that losing a device would also mean losing offline funds.

The proposal includes privacy measures designed to limit access to personal information. It supports tools such as zero-knowledge proofs for transaction verification.

Lawmakers also included holding limits for individuals. The European Commission would set those limits after receiving ECB recommendations. Authorities would review the thresholds regularly.

Draft Rules Define Usage, Distribution and Timeline

The proposal prevents the digital euro from paying interest. Businesses could hold digital euros temporarily while collecting incoming payments. However, the draft generally limits that period to 24 hours.

Most businesses would need to accept the digital euro once it launches. The proposal provides exemptions for very small firms and some self-employed operators. Those exemptions apply when businesses do not already accept digital payments.

Basic services would remain free for users. Account access and payment functions would not carry charges. Offline transactions would also remain free under the draft framework.

The legislation outlines a distribution model involving banks and payment providers. Regulated crypto firms could also participate in distribution activities. Post offices and e-money providers could support access across the eurozone.

Before launch, the ECB must complete technical standards and pilot programs. The institution must also coordinate implementation with payment providers. After final approval, authorities would begin a rollout period lasting at least two years.

The committee vote follows years of work on the project. The ECB started laying the groundwork for the initiative in 2020. ECB Executive Board member Piero Cipollone said last September that a launch would likely occur in 2029.

Last month, Qivalis expanded its banking consortium to 37 institutions. New members included ABN AMRO, Rabobank, Nordea, and Intesa Sanpaolo. The consortium still targets a second-half 2026 launch for its regulated euro stablecoin initiative.

Howard Davies said, “We are not merely building payment rails.” He added that the group aims to embed European standards into future digital money systems. CoinGecko data shows U.S. dollar stablecoins currently account for 98% of the market.

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