European Parliament Approves Framework for Digital Euro

The European Parliament has taken a major step toward the establishment of a digital euro by approving a legal framework that aims to introduce a state-supported digital currency by 2029. This initiative is designed to reduce Europe’s reliance on U.S. payment systems.

Legal Framework Approved for Digital Euro by 2029

On June 23, 2026, the Economic and Monetary Affairs Committee of the European Parliament endorsed the legal structure necessary for launching a central bank-backed digital currency. This decision initiates trilogue discussions among EU member states to finalize the legislation, marking the end of three years of negotiations between central banks and commercial banks.

European Central Bank (ECB) President Christine Lagarde has emphasized the importance of the digital euro for maintaining monetary independence in Europe, particularly in relation to U.S. dollar-pegged stablecoins and foreign payment service providers like Visa and Mastercard. Currently, around two-thirds of card transactions in the eurozone are handled by non-European companies.

Markus Ferber, a prominent member of the ECON Committee, highlighted the geopolitical necessity of enhancing the resilience of Europe’s payment systems, stating that reliance on foreign providers is no longer acceptable amidst growing tensions.

The approved regulations will allow for both online and offline versions of the digital euro by 2029. The offline version will facilitate direct peer-to-peer transactions without internet access, ensuring privacy similar to cash transactions. Additionally, to safeguard traditional banking systems, there will be limits on the amount individuals can hold in digital wallets.

A 12-month pilot program will be initiated to test the digital euro's infrastructure with selected merchants and payment providers. Lagarde has reassured the public that cash will remain available, indicating that the digital euro and physical banknotes can coexist.