The European Union’s proposed digital euro has taken a significant step forward after members of the European Parliament’s Committee on Economic and Monetary Affairs approved legislation that would govern the future electronic currency, according to ECO News.
The digital euro would be an electronic version of the euro issued by the European Central Bank (ECB). Rather than replacing cash, it is intended to complement banknotes and coins by providing an additional payment option for consumers and businesses across the EU.
Modernising the payment system
The European Commission first presented its proposal in June 2023 as part of the Single Currency Package, which aims to establish the legal framework for the eventual introduction of the digital currency. The package also reinforces the legal status of euro banknotes and coins, ensuring that cash remains widely available and accepted as a means of payment, with only limited exceptions.
According to the Commission, the digital euro is designed to modernise Europe’s payment system, strengthen the EU’s financial sovereignty and reduce reliance on private international payment networks such as Visa and Mastercard. Officials also argue that it would encourage competition and innovation while giving Europe greater control over its payment infrastructure.
How it would work
The digital euro would have the same value as physical cash and could be used for both online and in-store purchases. Online transactions would be carried out through accounts held with banks or payment service providers, while offline payments would allow money to be transferred directly between devices, such as smartphones or payment cards, without an internet connection.
The ECB describes the digital euro as a secure form of public money for the digital age that would complement cash while protecting users’ privacy and supporting financial stability. The central bank has stressed that safeguarding personal data remains one of its key objectives.
Parliamentary support and next steps
According to ECO News, members of the European Parliament have said the digital euro should be secure, private and free to use for essential services. They support measures to protect users’ privacy and have proposed limits on the amount of digital euros individuals could hold in order to safeguard financial stability and the wider banking system. They also want merchants to broadly accept the currency, subject to limited exceptions.
There is currently no official launch date. The proposal must still be negotiated between the European Parliament, the Council of the European Union and the European Commission through informal negotiations known as trilogues before any legislation can be formally adopted.
If the legislation is approved during 2026, the ECB expects it could be in a position to issue the first digital euro in 2029. Before any launch, the central bank plans to conduct a 12-month pilot programme beginning in the second half of 2027 to test the system and ensure it can operate safely and reliably.
EU member states have also backed maintaining widespread access to cash, stressing that citizens should continue to be free to choose whether they pay with physical money or the future digital euro.
