Digital Euro Moves Toward Approval as EU Committee Backs ECB Plan

Highlights:

• The digital euro cleared a key EU committee vote and could get final approval by the end of this year.
• Users will face holding limits and earn no interest, keeping banks safe from large deposit outflows.
• If approved, the ECB will run a pilot in 2027 and aim for a full rollout in 2029.

The European Central Bank (ECB) has moved one step closer to launching a digital euro after winning key support from a European Parliament committee. Reuters reported on Tuesday that the Parliament’s economic committee approved draft rules for the project, giving the ECB an important boost after years of debate.

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The digital euro would be a digital version of cash issued by the ECB. It would allow people in the euro area to make payments online and in shops. Banks and fintech companies would offer the service to users, while the money itself would be backed by the central bank.

The project is part of Europe’s plan to reduce its reliance on foreign payment companies. Today, many card payments in Europe depend on major U.S. networks such as Visa and Mastercard. European officials want a payment system that gives the region greater control and strengthens the euro in the digital age.

EU committee advances digital euro bill after key vote: rules cover offline/online use, privacy safeguards, holding limits, and no interest payments. Potential implication: could steer euro-denominated flows and policy risk for crypto assets linked to EUR exposure. $EUR? pic.twitter.com/JQ5pC5v4qP

— Bpay News (@bpaynews) June 23, 2026

Digital Euro Moves Toward Final EU Approval

The committee vote does not mean the digital euro is fully approved yet. However, it clears an important stage in the lawmaking process. If the full European Parliament does not object, lawmakers could start talks with EU governments and the European Commission next month.

According to the report, officials aim to reach final approval by the end of the year. The ECB then plans to run a 12-month pilot in the second half of 2027. If the project moves ahead as planned, a full launch could come in 2029. The digital euro has been in development for about six years. The idea has gained more attention as Europe seeks greater financial independence. Some officials worry that payment systems controlled outside Europe could become a risk during political or trade tensions.

Banks Get Limits to Reduce Risks

European banks have raised concerns about the digital euro for several years. Their main worry is that people may move money out of bank accounts and into digital euro wallets. That could reduce deposits and affect bank income.

To reduce that risk, lawmakers included holding limits in the draft rules. The European Commission would decide how many digital euros each person could hold, based on advice from the ECB. The limit would be reviewed at least every two years.

Businesses would face tighter rules. Lawmakers would stop them from holding digital euros for more than 24 hours. The digital euro would also pay no interest. The system would not charge users for basic payments. Reuters said ECB simulations showed that users could withdraw up to 699 billion euros from euro zone banks if officials set the holding limit at 3,000 euros per person. That would equal 8.2% of retail sight deposits. Smaller lenders and retail-focused banks could feel a stronger impact.

Some questions still need answers. Cost is the biggest issue. The ECB estimates that banks may need to spend between four billion euros and six billion euros over four years to help build the digital euro system. There is also no final decision on how banks and payment companies will be paid for their work. Some lawmakers and industry experts are also unsure whether the digital euro can compete with private payment services already used in Europe. The committee vote has nonetheless helped to provide the ECB with fresh momentum.

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