Brussels: The digital euro is heading into its decisive negotiating phase, as EU lawmakers and governments prepare to open trilogue talks by the end of July 2026 on the regulation that would create the currency. The European Parliament approved its position at first reading in June, clearing the last big hurdle before the three institutions agree a final text.

The digital euro would give the bloc its own central-bank digital currency, a public alternative to the private card networks and payment apps that dominate everyday spending. Supporters in Brussels frame it as a matter of sovereignty, arguing that Europe cannot leave its payment rails in the hands of a handful of foreign firms.

Parliament’s version keeps several protections that banks and privacy campaigners demanded. It promises cash-like privacy for offline payments, sets strict limits on how much digital currency a person can hold, and mandates a pilot before any wide rollout. The Parliament’s legislative file on the digital euro tracks each step of the process.

The European Central Bank has pushed hard for the project. Executive Board member Piero Cipollone urged legislators to take a clear position, warning that delay would leave the continent exposed as payments move online and abroad.

The ECB says it could issue the currency by 2029 if lawmakers finalise the rules this year or next. It plans to begin a pilot in the third quarter of 2026, working with selected payment providers to test both the online and offline versions before any public launch.

Holding limits sit at the centre of the debate. Banks fear that if households park large sums in digital euros, deposits could drain out of the commercial banking system during a crisis. Negotiators must now settle how tight those caps should be without making the currency useless.

Privacy is the other flashpoint. Campaigners want guarantees that the new money will not become a tool for surveillance, while regulators insist on safeguards against money laundering. The offline mode, which promises anonymity closer to cash, aims to square that circle.

Italy’s central bank welcomed Parliament’s vote as a milestone, noting that the file now moves to talks among Parliament, Council and Commission. The Banca d’Italia statement on the approval underlined the ambition to finish the legislative process by the end of 2026.

Not everyone is convinced the bloc needs a digital euro at all. Sceptics question whether consumers, already served by fast private apps, will bother to use it, and whether the cost of building the system justifies the benefit.

Backers respond that resilience matters more than convenience. A public payment option, they argue, would keep money flowing if a private network failed or if geopolitical pressure cut Europe off from foreign providers.

The trilogue will decide how far those arguments carry. If negotiators hold to the end-2026 timetable, the digital euro could move from political ambition to legal reality within months, leaving the ECB to build what lawmakers have designed.