The European Parliament’s Committee on Economic and Monetary Affairs has approved its draft negotiating position on legislation governing the launch of the digital euro. This marks a significant step toward creating a digital version of the single European currency as part of a legislative package related to the future of the European Union’s monetary system.
Approval and Voting Details
The draft law on the digital euro received the support of 43 members, while 14 voted against and one abstained. The proposal is part of a package comprising three legislative files aimed at modernizing the EU's payment infrastructure.
Purpose and Features of the Digital Euro
The proposal aims to provide a public digital payment method for all residents of the euro area, reducing reliance on international payment card networks. Online payments would be conducted through an account-based system, while offline payments would be carried out through local storage devices. Under the proposal, banks and financial technology companies would distribute the digital euro, which would be available for electronic and direct payments across all euro area countries.
Limits and User Protections
The text includes measures to limit the transfer of deposits from banks to the digital currency. The European Commission would set a maximum amount of digital euro that an individual may hold, based on a recommendation from the European Central Bank, with the limit to be reviewed at least once every two years. The proposal also stipulates that companies would not be permitted to hold digital euro balances for more than 24 hours, and that the digital currency would be non-interest-bearing and free of charge for users.
Next Steps and Timeline
Subject to no objection from the European Parliament’s plenary session, negotiations are expected to begin next month between the Parliament, the Council of the European Union and the European Commission. The European institutions aim to adopt the final legislation before the end of the year.
