European Parliament Approves Digital Euro Negotiating Position

The European Parliament has adopted its negotiating position on the proposed digital euro framework. The vote allows Parliament to begin interinstitutional negotiations with the Council on the legal rules governing a retail digital euro issued by the European Central Bank (ECB).

The digital euro is designed as electronic central bank money for retail payments. It would complement cash and existing private-sector payment services rather than replace them. Users would access it through digital euro wallets offered by supervised credit institutions and payment service providers, while the ECB would operate the core infrastructure.

The proposal provides for both online and offline payments. Privacy remains a central issue: the system is intended to prevent the ECB from directly identifying users through payment data, while applicable anti-money-laundering requirements would continue to apply to intermediaries. A holding limit would also be set to manage potential effects on bank deposits and financial stability.

The negotiations are expected to focus heavily on the compensation model for intermediaries and the allocation of fees across the payment chain. The objective is to ensure that banks and payment providers have appropriate incentives to distribute the digital euro while keeping merchant fees lower than comparable card-payment fees. Subject to final legislative approval and technical preparation, a pilot is expected in 2027, with retail availability envisaged from 2029.