The European Parliament’s economic affairs committee is due to vote on the digital euro today, in a procedural step that could determine whether the European Union’s long-running plan for a public digital currency moves towards negotiation or remains caught between banking concerns, privacy politics and the European Central Bank’s timetable.
The digital euro file has been under discussion since the Commission tabled its proposal in 2023. Its stated purpose is to create a new form of central bank money that would exist alongside cash, allowing euro-area citizens and businesses to make digital payments backed by the ECB rather than by commercial providers alone.
The issue is technically complex, but the political argument is straightforward. Europe’s retail payments market remains heavily dependent on private and often non-European infrastructure. Card networks, mobile payment systems and digital wallets are central to daily commerce, yet many are controlled outside the euro area. Supporters of the project argue that this exposes the bloc to commercial dependency, technological fragmentation and geopolitical risk.
The ECB has presented the digital euro as a way to preserve the role of public money in an economy where cash is used less often. In a June speech, ECB Executive Board member Piero Cipollone described the project as part of a wider effort to ensure that people retain the freedom to pay with central bank money as payments become increasingly digital.
That argument has gained force as the EU has reassessed strategic dependencies across energy, defence, technology and financial infrastructure. The digital euro is now being discussed not only as a payments instrument, but as part of the bloc’s broader attempt to strengthen economic resilience. The question for lawmakers is whether that case is strong enough to overcome concerns over privacy, costs and the role of commercial banks.
The Council has already backed a negotiating position that includes both online and offline functionality. Offline use is politically important because it is intended to preserve some of the characteristics of cash, including resilience during network outages and a higher degree of privacy for low-value transactions. Online functionality, by contrast, is needed if the instrument is to be useful across modern digital commerce.
The European Parliament’s internal position has been more difficult. Earlier disagreements centred on whether the digital euro should be limited mainly to offline payments, how far the ECB should control the system, and how to prevent deposits from moving out of commercial banks into central bank-backed wallets. The committee vote therefore matters because it may clarify whether Parliament is ready to enter negotiations with the Council and Commission.
One of the most sensitive questions is the holding limit. If citizens and firms are allowed to hold large digital euro balances, commercial banks fear that deposits could shift away from them, particularly in periods of financial stress. If the limits are too low, however, the digital euro may become marginal and fail to achieve the scale needed for a credible public payments alternative.
The legislative work has therefore focused on who sets those limits, how they are reviewed, and how financial stability concerns are balanced against usability. According to the Parliament’s current legislative summary, negotiations in the economic affairs committee have included changes to the framework for holding limits, compensation rules and future review arrangements.
Costs are another point of dispute. Banks and payment service providers would be expected to help distribute and operate the digital euro, while merchants and users would expect a system that is affordable, simple and widely accepted. A public digital currency that is too expensive for intermediaries to support, or too restrictive for users to adopt, would struggle to deliver the sovereignty benefits claimed for it.
Privacy remains the most politically visible issue. Critics fear that a digital euro could allow excessive monitoring of individual payments. The ECB and Commission have repeatedly argued that the system would include privacy safeguards, with offline payments designed to provide cash-like features for smaller transactions. Lawmakers will have to decide whether those safeguards are sufficient and how they should be written into law.
The timing is also important. The ECB has continued its technical preparation while waiting for the legislative process to advance. It cannot issue a digital euro without a legal framework agreed by EU institutions. The central bank has indicated that a possible launch remains some years away, but legislative delay would push the project further into the next political cycle and risk weakening the EU’s claim that it is serious about monetary sovereignty.
The digital euro is not a replacement for cash. Both the Commission and the ECB have framed it as a complement to banknotes and coins. That distinction matters because public concern over access to cash remains strong in several member states. A separate EU proposal on the legal tender status of cash is intended to ensure that physical money remains accepted and accessible.
The committee vote will not by itself create a digital euro. It would instead determine whether Parliament can move closer to a formal negotiating mandate. Even if the file advances, the final design will still depend on talks between Parliament, the Council and the Commission, followed by further ECB decisions on whether and when to launch.
For Brussels, however, the vote is a test of credibility. The EU has spent years describing payment sovereignty as a strategic objective. It now has to decide whether it is prepared to build the legal and technical infrastructure needed to support that objective, or whether concerns from banks, privacy campaigners and sceptical lawmakers will continue to hold the project back.
