EU Parliament advances digital euro to talks with member states

The European Parliament voted on Thursday to send the digital euro into interinstitutional negotiations with member states, approving the proposal by 416 votes to 169, with 22 abstentions. The vote allows talks on rules and deployment of a central bank digital currency across the eurozone.

Rapporteur Fernando Navarrete Rojas will lead the Parliament’s negotiation team. He told lawmakers the focus will be on how the currency is offered to citizens, how privacy is protected and how to secure wide acceptance at points of sale. “The digital euro will complement cash, never replace it. 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 stated.

The Parliament set out that basic services-such as opening an account and managing funds-should be free and that at least one payment instrument must be available to users. The draft includes limits on how much digital euro a person can hold during early stages to prevent large flows of central bank money into digital balances and to protect commercial bank liquidity. Lawmakers also proposed transaction privacy safeguards and an exemption for small and micro enterprises that do not accept other digital payments from mandatory acceptance requirements.

The European Central Bank has been preparing technical and market arrangements to support retail use of a digital euro and has formed partnerships with major payment standard providers to allow integration with existing systems. Piero Cipollone, a member of the ECB’s Executive Board, argued the digital euro will “reduce Europe’s dependence on external providers and support innovative, pan-European payment solutions for consumers and merchants for domestic retail payments.”

Next steps require interinstitutional talks between the European Parliament, the European Commission and member states to agree final rules, consumer safeguards and technical arrangements. Those negotiations will cover holding limits, the scope of free services, privacy guarantees, interoperability with current payment infrastructure and the roles of banks and payment providers in distribution.

Supporters say the digital euro could strengthen European monetary sovereignty and provide a public option for digital payments. Opponents have raised concerns about potential impacts on bank deposits, competition with private payment firms and the need for strong privacy and security protections. Final adoption will depend on the outcome of the negotiations and the technical readiness of systems across the euro area.