Digital Euro Plans Clear Major Hurdle in EU Parliament

The European Parliament gave its backing on June 23 for the European Central Bank (ECB) to launch a central bank digital currency (CBDC) version of the euro.

The draft regulation, approved by the European Parliament’s economic committee, states that the introduction of the digital euro would “reduce overreliance on non-European providers by becoming a pan-European means of payment and would bring the single currency into the digital era by giving Union citizens the freedom to opt to pay with central bank money in their daily transactions.”

The proposed digital currency will essentially function as an electronic wallet guaranteed by the ECB but marketed by banks or fintech companies, and will be usable by all eurozone residents to make payments online and in person.

That wallet will be subject to an as-yet-undecided holding limit.

The member of the European Parliament appointed to head the legislative process for the legislation, Fernando Navarrete Rojas, a Spanish economist, said that “with the single currency package, we are protecting citizens’ freedom to choose how they pay.”

“We are strengthening access to and acceptance of cash, while making central bank money available in digital form,” he said.

He added that the digital euro “will complement cash, never replace it,” saying that “no one should be forced away from cash, and no one should be left without a secure, resilient and genuinely European digital payment option.”

Navarrete Rojas also said that the agreement “ensures that privacy will be built into the digital euro from the outset. Europeans will gain a secure digital payment option while remaining in control of both their money and their personal data.”

Lawmakers should soon begin negotiating with the European Council of EU governments and the European Commission next month, aiming for final approval by the end of the year, barring an objection at the plenary session slated for next month.

The committee adopted its position by a vote of 43–14, with 1 abstention.

Siegbert Frank Droese of the right-wing Europe of Sovereign Nations political group in the European Parliament said his faction had voted against the proposal.

The approval of draft rules comes after three years of back-and-forth between the ECB and banks, which have been concerned about deposit outflows and potential revenue losses.

A 2025 PwC study commissioned by the European Banking Federation, the European Association of Co-operative Banks, and the European Savings and Retail Banks Group estimated implementation costs for banks in the range of tens of billions of euros across the sector in the early years.

Specific concerns included adapting IT systems for funding and defunding, waterfall mechanisms to enforce holding limits, billing and fee systems, and branches/ATMs.

Banks also highlighted risks to liquidity management, lending capacity, and overall financial stability.

In an effort to assuage these concerns, the European Parliament laid out safeguards in the draft regulation, including that the European Commission would decide how many digital euros each user could own, based on an ECB recommendation, and review that ceiling at least every two years.

Businesses would not be allowed to hold digital euros for longer than 24 hours. The digital euro would not earn any interest or cost anything to its users.

ECB simulations published in 2025 showed that depositors could withdraw up to 699 billion euros ($796 billion) from euro zone banks if a limit on digital euro holdings was set at 3,000 euros each, equalling 8.2 percent of all retail sight deposits.

It did, however, show that the impact on small market lenders and retail banks would be greater than on larger institutions.

The European Central Bank said it welcomed the committee’s decision in a statement, according to Euro News.

It plans to run a 12-month pilot of the digital euro starting in the second half of next year before a full launch in 2029.

Other nations, such as Canada and Australia, are planning to introduce CBDCs or have already done so, like the Chinese Communist Party in China.

The yuan version of the CBDC strengthens the CCP’s “Social Credit System,” James Gorrie said in a column for The Epoch Times in April.

“A retail CBDC allows the state to freeze assets instantly if a citizen’s behavior deviates from Party orthodoxy,” he said.

US Opposition to CBDCs

The United States, however, under the administration of U.S. President Donald Trump, is moving in a markedly different direction.

Calling it “a dangerous threat to freedom,” Trump said during his 2024 campaign that he would not allow it in the United States and vowed to take legislative action to prevent it.

Last July, he said, “I also remain fully committed to my pledge, never to allow the creation of a central bank digital currency in America,” Trump said. “My first week in office, I signed an executive order to ban the creation of a CBDC in the United States. And very soon, I look forward to signing legislation that will codify and make it a permanent law.”

Since then, numerous pieces of legislation have come through, with the most recent being the 4-year CBDC ban in the bipartisan housing bill, which passed through the Senate on June 22.

That bill, however, hit a stumbling block on June 24, when Trump refused to sign the legislation, saying that Congress should first pass the SAVE America Act, an election integrity bill requiring photo voter ID and proof of citizenship.