Investing.com — The European Parliament’s approval of its position on the digital euro marks a major milestone for the European Central Bank’s proposed digital currency, with UBS saying the project remains on track for a possible launch in 2029.
The vote clears one of the biggest legislative hurdles facing the project. Negotiations between the European Parliament, European Commission, and the Council of the European Union are expected later this year before the ECB decides whether to move ahead with issuing the digital currency.
Under the current timetable, a formal decision could come in late 2026 if legislation is finalized, followed by a pilot phase during 2027 and 2028. A public rollout could begin in 2029.
The digital euro is intended to function as a retail central bank digital currency for everyday payments rather than savings or investments. It would complement cash, with commercial banks and payment providers offering digital wallets and customer services, while the ECB manages issuance and settlement.
To limit the impact on bank deposits, individual holdings are expected to be capped at around €3,000 and would not earn interest. Any balances above the limit could automatically be transferred to linked bank accounts.
Privacy remains a key feature of the proposal. Online transactions would offer protections similar to existing electronic payments, while offline payments would provide greater privacy by allowing transactions without sharing data with payment providers or the Eurosystem.
The note says the project’s focus has broadened beyond payment modernization. Policymakers increasingly view the digital euro as a way to strengthen Europe’s strategic autonomy, reduce dependence on foreign payment providers, and prepare for the growing use of stablecoins and tokenized financial markets.
Although adoption is expected to be gradual, the economists believe the digital euro will become part of the ECB’s broader strategy to modernize retail, wholesale, and cross-border payments across the euro area.
Related articles
What would the digital euro look like?
JPMorgan outlines ten strategic themes that could shape the outlook for 2026
