EU Lawmakers Advance Digital Euro Plan With Strong Committee Support

• EU committee approves digital euro proposal, advancing CBDC legislation toward negotiations.
• Privacy safeguards include zero-knowledge proofs and limits on ECB access to user data.
• Digital euro framework adds holding caps and free basic services to protect stability.

The European Parliament’s Economic and Monetary Affairs Committee has advanced the digital euro proposal after approving key legislation related to the European Union’s central bank digital currency initiative. The vote marks another step toward establishing a legal framework for a digital euro while preserving cash as a widely accepted payment method across the euro area.

Committee Backs Digital Euro Framework

European lawmakers approved the digital euro regulation with a 43-14 vote, moving the proposal closer to negotiations with EU member states. The package also included measures covering digital euro services in non-euro countries and protections for cash as legal tender.

The proposed digital euro would be issued by the European Central Bank and function as a digital form of public money. According to lawmakers, the system would support both online and offline transactions across the eurozone.

Under the framework, online payments would operate through an account-based model managed by authorized payment providers. Meanwhile, offline payments would rely on value stored directly on devices, creating a payment experience similar to cash.

Lawmakers emphasized that the digital euro is intended to complement physical cash rather than replace it. The proposal also seeks to ensure that citizens retain freedom in choosing their preferred payment method.

Privacy remains a central feature of the legislation. The framework includes privacy-by-design principles and proposes the use of zero-knowledge proof technology for transaction verification. As a result, transactions could be validated without exposing unnecessary personal information.

The proposal states that the European Central Bank would not have access to users’ personal identification data. Supporters argue that these safeguards could strengthen public trust in a future digital euro system.

Privacy Measures and Financial Stability Safeguards

The draft legislation introduces limits on individual digital euro holdings to reduce risks to the broader banking sector. The European Commission would determine those limits after consulting the ECB and review them periodically.

Businesses would generally be prohibited from holding digital euros beyond short periods needed to receive payments. In most cases, incoming balances could only remain in digital euro form for up to 24 hours.

The framework also prevents digital euro balances from earning interest. Lawmakers believe this measure could reduce incentives for large-scale transfers from traditional bank deposits.

Basic services, including account access, fund management, and standard payments, would remain free for users. However, payment providers could charge regulated fees for certain additional services.

Before any launch occurs, the ECB must finalize technical standards, conduct pilot programs, and complete infrastructure testing. Current plans target technical readiness by 2029, although final implementation depends on the completion of the legislative process and approval from EU institutions.

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