EU Committee Greenlights Digital Euro Bill — Cash Still Wins the Popularity Contest 💶

The European Parliament's Economic and Monetary Affairs Committee (ECON) approved its position on the digital euro package Tuesday in a 43–14 vote, moving the EU's central bank digital currency (CBDC) one step closer to reality as the European Central Bank (ECB) targets a 2029 launch. MEP Fernando Navarrete Rojas said the package "protects citizens' freedom to choose how they pay" and would "complement cash, never replace it."

Under the approved draft, the ECB would issue the digital euro with both online and offline functionality. Online payments would use an account-based system, while offline payments would rely on local device storage, functioning similarly to cash. As the announcement stated, "The offline functionality would be equivalent to using physical cash, as losing the device would mean losing the offline money with no refund possible." The proposal incorporates privacy-by-design features, including zero-knowledge proofs (ZKPs) to verify transactions without exposing personal data, with the announcement confirming that "the ECB would not have access to personal identification data."

The draft introduces holding limits to protect financial stability, with caps set by the European Commission based on ECB recommendations and reviewed regularly. The currency would not pay interest, and businesses would only be permitted to hold digital euros temporarily to accumulate incoming payments for up to 24 hours. Businesses would generally be required to accept the digital euro, with exceptions for very small firms and self-employed operators who do not already accept digital payments, while basic services such as account access and payments would be free, additional services could carry capped fees, and offline transactions would remain free.

The legislation outlines a broader distribution model involving banks, payment providers, regulated crypto firms, post offices and e-money providers across the eurozone. Before launch, the ECB would need to finalize technical rules, run pilot tests and coordinate with payment providers, followed by a rollout period of at least two years after approval of the final law. The latest approval follows the ECB's groundwork on a CBDC that began in 2020, a project that has faced repeated delays.