Brussels: In a city where contactless taps long ago displaced coins in most shops, the prospect of a central-bank currency that lives on a phone has moved a step closer to reality. The European Parliament’s economic and monetary affairs committee adopted its position on the single-currency package on 23 June, backing the file that would establish a digital euro by forty-three votes to fourteen, with one abstention.
The vote does not create the currency, but it unlocks the next stage. Provided the plenary raises no objection, lawmakers expect to open negotiations with the member states and the Commission within weeks, with the institutions aiming to agree final legislation before the end of the year. Only after that legal foundation is laid could the European Central Bank move to a pilot, tentatively pencilled in for 2027, with any first issuance not envisaged before the end of the decade.
The design that emerged from the committee tries to answer the criticism that has dogged the project since the central bank began studying it. The digital euro would exist in two forms. An online version, account-based and distributed through banks and licensed fintech firms, would handle everyday payments much like a card. An offline version, stored locally on a device, is meant to behave like cash, settling directly between two parties without an intermediary and carrying stronger privacy guarantees for the smallest transactions.
That offline mode is the political heart of the proposal. Privacy campaigners and some lawmakers have warned that a state-issued digital currency could become a tool for surveillance, logging every purchase a citizen makes. By promising that low-value offline payments would leave no central trace, the drafters sought to reassure a public attached to the anonymity of banknotes. Whether the safeguards survive the coming negotiations intact is one of the file’s open questions.
The banking sector harbours a different anxiety. Lenders fear that if households can hold money directly at the central bank, deposits could drain out of commercial banks in a crisis, weakening the institutions that fund the wider economy. To contain that risk the proposal envisages holding limits, caps on how much digital euro any individual could keep, though the precise figures have been left for later calibration. Banks would also retain the customer relationship, distributing the currency rather than being bypassed by it.
Supporters frame the project as a matter of strategic autonomy. Much of Europe’s retail payment infrastructure runs on card networks and platforms headquartered abroad, leaving the continent dependent on systems it does not control. A public digital currency, the argument goes, would give the euro area a sovereign payment rail that works everywhere the single currency circulates, online and in person, available to every resident.
Sceptics question whether citizens who already enjoy fast, free electronic payments will see the point. The central bank counters that resilience, not novelty, is the goal, a fallback that keeps working if private systems fail. With the committee vote secured, that argument now moves from the technical committees into the harder arena of inter-institutional bargaining.
