EU Parliament votes to advance digital euro project

The European Parliament on Thursday voted to approve the creation of a digital euro, clearing the path for trilogue negotiations between the Parliament, the Council of the European Union, and the European Commission on a currency designed to reduce Europe's reliance on American payment networks.

The vote in Strasbourg passed with 416 in favor, 169 against, and 22 abstentions. The ECR and Patriots for Europe political groups had challenged the Economic and Monetary Affairs Committee's earlier decision to open interinstitutional talks, but the challenge failed to block the mandate.mlex+3

What Comes Next

Rapporteur Fernando Navarrete Rojas of the European People's Party will lead Parliament's negotiating team. A first round of negotiations with the Irish Presidency of the Council is scheduled to take place shortly. According to Euronews, the most intensive negotiations are expected this autumn, with final approval targeted by the end of 2026.europarl.europa+1

The most contentious issue in the upcoming talks will be the "compensation model" — deciding how banks and payment service providers are paid for distributing digital euro services, according to three sources involved in the negotiations cited by Euronews. Merchant fees are also expected to be lower than current card transaction costs.euronews

How the Digital Euro Would Work

Under Parliament's position, the digital euro would be an electronic form of money issued by the European Central Bank, functioning both online and offline. Privacy safeguards would be built in by design, with zero-knowledge proofs allowing transactions to be verified without exposing personal data. The ECB would not have access to personal identification information.europarl.europa+1

Most businesses would be required to accept the digital euro, though exceptions would apply to self-employed individuals and micro enterprises that do not accept other digital payments. Individuals would face a holding cap, still to be calibrated, while businesses would not be allowed to hold digital euros for longer than 24 hours. The currency would earn no interest and basic services would be free of charge.europarl.europa+1

Timeline and Context

The ECB plans a 12-month pilot program in the second half of 2027, testing person-to-person and person-to-business payments in a controlled environment. A full EU-wide launch is projected for 2029. The initiative comes as transatlantic tensions have pushed European policymakers to seek greater payments sovereignty, with Reuters reporting that the project aims to make the euro zone "less reliant on U.S. credit cards".centralbank+3