A European Parliament committee approved draft rules for the rollout of the digital euro, establishing requirements for privacy, financial stability, and the accessibility of the central bank digital currency (CBDC).
The European Parliament’s Committee on Economic and Monetary Affairs (ECON) approved the draft legislation on the digital euro. Before entering into force, the proposal will be submitted to the Council of the European Union after Parliament approves the committee’s negotiating position during its July plenary session.
The proposal was backed by 43 lawmakers, while 14 voted against and one abstained. It sets out the principles governing the issuance, circulation, and use of the European Central Bank’s (ECB) digital currency. It also introduces personal data protection safeguards and measures aimed at preserving financial stability.
The proposal approved by the ECON committee includes the following key provisions:
- Payment format. The digital euro would support both online and offline payments. Online transactions would be processed through an account-based system, while offline payments would rely on funds stored locally on a user’s device. If the device is lost, the offline funds stored on it couldn’t be recovered.
- Privacy. The proposal incorporates the Privacy by Design and Privacy by Default principles. It also calls for the use of zero-knowledge proof (ZKP) technology to verify transactions without exposing personal data. The ECB wouldn’t have access to information that could identify users.
- Distribution. Banks, payment service providers, electronic money institutions, postal operators, and licensed crypto-asset service providers would be allowed to distribute the digital euro.
- Use. Most businesses would be required to accept the CBDC as a means of payment. Exemptions would apply to self-employed individuals, as well as small and micro businesses that don’t support other digital payment methods. Tourists and, in certain cases, people living outside the euro area would also be able to use the digital euro.
- Fees. Opening an account, holding and managing funds, and providing users with at least one payment tool, such as a digital wallet, would be free of charge. Additional services could be subject to fees. However, inactivity charges and mandatory service bundling would be prohibited. Fees between payment infrastructure participants and merchants would be capped, while offline payments would remain entirely free.
- Limits. To safeguard financial stability, the amount of CBDC any individual could hold would be capped. The European Commission would set the limit based on recommendations from the ECB and review it at least once every two years. Businesses wouldn’t be allowed to hold digital euros, except for incoming payments retained for up to 24 hours. The digital euro also wouldn’t bear interest, and no interest would accrue on account balances.
Before the project can be fully launched, the ECB must finalize the rulebook, build the required infrastructure, conduct real-world pilot tests, and establish liability rules with particular attention to offline payment risks, including double spending. Once the legislation receives final approval, a transition period of at least 24 months will allow banks, service providers, and users to prepare for the rollout, while national authorities will conduct public awareness campaigns.
The legislative package also included two related bills:
- allowing banks and payment service providers from EU member states outside the euro area to distribute the digital euro under a common regulatory framework;
- establishing the legal status of cash, requiring euro area countries to ensure its availability and prohibiting businesses from refusing cash payments through notices or standard contractual terms.
Despite progress on the legislative initiative, the EU hasn’t yet made a final decision on issuing the digital euro. To prepare the project, the ECB established a working group in 2023 to develop standards and regulatory rules for the CBDC. In 2026, it opened applications for experts to join the initiative. In addition, the ECB announced a new project phase in 2025 focused on technical readiness for a full-scale CBDC launch in 2029. It also signed framework agreements with companies that will develop the core technical components of the digital euro.
