The European Parliament's Committee on Economic and Monetary Affairs approved its negotiating position on legislation creating a digital euro. MEPs voted 43-14 in favor of the proposal, which would establish a digital euro as an electronic form of central bank money that complements cash rather than replaces it. The committee also backed related legislation governing distribution in non-euro member states and reaffirming the legal tender status of euro banknotes and coins. The approval aims to strengthen Europe's payments sovereignty while preserving privacy and financial stability. The vote marks another milestone in one of the world's most advanced central bank digital currency projects as governments seek to reduce dependence on global payment networks.
Parliament Committee Mandates Privacy-By-Design Framework
The approved proposal requires the digital euro to follow "privacy by design" and "privacy by default" principles. Advanced cryptographic technologies, including zero-knowledge proofs, would allow transactions to be verified without revealing unnecessary personal information. The European Central Bank would not have access to users' personal identification data. The digital euro would support both online and offline payments. Offline transactions would function similarly to cash by allowing payments directly between devices without an internet connection. Users would bear the risk of losing offline funds if the storage device were lost or damaged.
Approved Legislation Sets Individual Holding Limits
MEPs support limits on how many digital euros individuals can hold. Under the committee's proposal, the European Commission would determine the holding limit based on recommendations from the ECB, with Parliament receiving full decision-making powers and reviews taking place at least every two years. Businesses generally would not be permitted to hold digital euros beyond retaining incoming payments for up to 24 hours. The legislation also confirms that digital euro balances would neither earn interest nor incur charges.
Distribution Model Includes Banks And Crypto Providers
The proposal adopts a distribution model that would allow banks, electronic money institutions, post offices and regulated crypto-asset service providers to offer digital euro services across the European Union. Most merchants accepting electronic payments would also be required to accept the digital euro, although exemptions would apply to self-employed individuals and smaller businesses that do not currently accept digital payments. Basic services, including opening an account, holding funds and accessing at least one payment instrument, would be provided free of charge. Payment service providers could charge for optional services, with lawmakers proposing caps on merchant fees and inter-provider charges, while offline payments would remain entirely free.
ECB Required To Complete Testing Programme Before Launch
The approved legislation requires the ECB to complete a detailed implementation programme that includes a comprehensive rulebook, technical infrastructure, liability arrangements and real-world pilot testing. Particular attention would be given to risks associated with offline payments, including preventing double-spending. A minimum 24-month implementation period would allow banks, payment providers, merchants and consumers to prepare while governments conduct public awareness campaigns. The committee also specified that the ECB's operational responsibilities for the digital euro should remain separate from its monetary policy functions.
Legislation Mandates Cash Access Protections
Lawmakers approved rules designed to preserve access to physical cash alongside the digital euro legislation. The proposal would require euro area member states to maintain adequate access to cash and prepare contingency plans for digital payment outages. Businesses generally would not be permitted to refuse cash through blanket "no cash" policies, while governments would be required to monitor cash availability, particularly for elderly people, lower-income households and financially vulnerable citizens. The committee also backed legislation allowing banks and payment providers from non-euro EU member states to distribute the digital euro under the same framework, while giving the ECB authority to restrict access where necessary to protect national currencies.
FAQ
What did the European Parliament's Committee on Economic and Monetary Affairs approve?
The committee approved its negotiating position on legislation creating a digital euro. MEPs voted 43-14 in favor of the proposal, which would establish a digital euro as an electronic form of central bank money that complements cash rather than replaces it.
How does the approved legislation protect user privacy in digital euro transactions?
The proposal requires the digital euro to follow "privacy by design" and "privacy by default" principles. Advanced cryptographic technologies, including zero-knowledge proofs, would allow transactions to be verified without revealing unnecessary personal information, and the European Central Bank would not have access to users' personal identification data.
What holding limits does the committee support for digital euros?
MEPs support limits on how many digital euros individuals can hold, with the European Commission determining the holding limit based on recommendations from the ECB. Businesses generally would not be permitted to hold digital euros beyond retaining incoming payments for up to 24 hours, and digital euro balances would neither earn interest nor incur charges.
