European Parliament backs digital euro negotiations

The European Parliament on Thursday voted to support renewed negotiations on creating a digital version of the euro, a significant step toward the bloc's first central bank digital currency. The vote, which passed with 416 in favor, 169 against, and 22 abstentions, paves the way for talks with EU member states later this month.

Lawmakers aim to reach a deal on the legal framework by the end of 2026. If successful, the European Central Bank (ECB) could introduce the digital euro to citizens by 2029, according to reports from Deutsche Welle and RFI.

Reducing dependence on US payment networks

The digital euro is designed to reduce Europe's reliance on US-owned payment systems such as Visa, Mastercard, Apple Pay, and Google Pay. According to an ECB report cited by RFI, international card schemes accounted for approximately 61% of euro area card transactions in 2022, while the domestic market share of national card schemes is declining.

Deutsche Welle adds that nearly two-thirds of card payments in the eurozone are handled by non-European companies, and 13 out of 21 eurozone countries have no national card scheme for day-to-day payments.

ECB President Christine Lagarde applauded the vote, stressing the need for a European solution. "We depend predominantly on US, but also sometimes Chinese, networks to organise payments," she said. "We need to have a European solution because we want to be sovereign at home."

How the digital euro would work

The digital euro would be an electronic form of central bank money, backed directly by the ECB and accessible via a digital wallet, according to RFI. It would work alongside cash and existing bank accounts rather than replace them, and would have the same value as cash and banknotes, as reported by Deutsche Welle.

Users would create an account with a bank or a public entity like a post office, then transfer money or deposit to use the digital euro. Payments could be made at stores, online, and between individuals using cards, apps, or phones.

Privacy is a key feature. EU officials have said the digital euro would protect users' identity and include an offline mode that would be as confidential as using cash, according to Deutsche Welle.

EU lawmaker Fernando Navarrete Rojas rejected rumors that the digital euro could be used "as a tool of control," stressing it would utilize "the highest privacy standards." He described the digital euro as "an alternative, not a requirement."

Key claims

  • The European Parliament voted 416 to 169 in favor of renewed negotiations on the digital euro, with 22 abstentions.
  • The digital euro would be backed by the ECB and available via a digital wallet, with the same value as cash.
  • A deal between parliament and member states could be reached by the end of 2026, with the currency potentially available by 2029.
  • The project aims to reduce dependence on US payment systems like Visa, Mastercard, Apple Pay, and Google Pay.
  • The digital euro would have privacy safeguards and an offline mode, according to EU officials.
  • ECB President Christine Lagarde praised the vote, highlighting European sovereignty in payments.

Looking ahead

Negotiators from the European Parliament and EU capitals are expected to meet this month for the first round of talks. A pilot programme is planned for mid-2027 to test the digital euro's functionality.

While the vote represents a clear endorsement, experts note the challenge of ensuring the digital euro does not function as a full cash bank account, which could have broader economic implications. The project remains years away from launch, with the legal framework and technical details still to be finalized.