EU begins final negotiations on digital euro launch

The European Central Bank's digital euro project entered a decisive new phase this week as formal trilogue negotiations between the European Parliament, EU governments, and the European Commission began on Monday, July 13, marking the start of what could be the final legislative push to bring the digital currency into existence by 2029.instagram+1

Parliament Clears the Way

The European Parliament voted on July 9 to approve its negotiating position on the digital euro, with 416 votes in favour, 169 against, and 22 abstentions. The vote followed a challenge from the PfE, ECR, and ESN political groups against an earlier June 23 decision by the Economic and Monetary Affairs Committee to open interinstitutional talks.sofiaglobe+1

Rapporteur Fernando Navarrete Rojas of the European People's Party will lead Parliament's negotiating team. Under the Irish Presidency of the Council, negotiators aim to finalize the legal framework by the end of 2026. According to Euronews Euronext N.V., the most sensitive issues in the talks will be the compensation model for banks and how fees are shared across the payment chain.europarl.europa+2

Bridging the Banking Divide

The negotiations come against a backdrop of longstanding tension between the ECB and Europe's banking industry. Banks have argued that the digital euro would reduce their deposits, weaken their funding model, and undermine customer relationships. Some French banks proposed limiting individual holdings to as little as €100, far below the roughly €3,000 figure discussed by the ECB.fii-institute+2

To address these concerns, the ECB has pursued extensive industry collaboration ahead of its planned 12-month pilot in the second half of 2027. The central bank opened a formal call in March for licensed payment service providers to participate, with applications due by May 14. The ECB expects to select 10 to 30 PSPs covering the entire euro area. ECB Executive Board member Piero Cipollone told Italy's banking association in February that the digital euro aims to "maintain the central role of banks in payments" and that banks would be compensated for their distribution role.ecb.europa+3

A Push for Financial Sovereignty

The digital euro is designed as an electronic wallet backed by the central bank but distributed by banks and fintech companies, allowing euro area residents to make payments both online and offline. Privacy safeguards and a cap on individual holdings are central to Parliament's position, alongside a requirement that most businesses accept it.reuters+1

Proponents frame the project as essential to reducing Europe's dependence on non-EU payment providers. As Reuters reported, more than two-thirds of European card payment transactions are processed by companies headquartered outside the EU. The most intensive negotiations are expected this autumn, with a pilot programme due to begin in 2027 and a potential full launch targeted for 2029.ecb.europa+3