by Jacob Thomas, Natural News:
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- The European Central Bank (ECB) secured parliamentary backing for a digital euro, an electronic wallet guaranteed by the central bank to reduce reliance on U.S. payment networks amid transatlantic tensions.
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- ECB plans a phased rollout: first for person-to-person and e-commerce transactions, then for online and offline point-of-sale payments and later for government payments, taxes, and customs duties.
- Draft rules protect commercial banks from deposit outflows by capping digital euro holdings (reviewed every two years), barring businesses from holding digital euros over 24 hours, and offering no interest, with free use for consumers.
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- A 12-month pilot of the digital euro is planned for the second half of next year, with a full launch targeted for 2029, pending final approval from the European Parliament, European Council, and European Commission.
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- Critics like Auke Zijlstra argue the digital euro may become obsolete by launch due to private alternatives like Wero, while Laura Casonato notes the proposal keeps commercial banks central, limiting it as a true alternative to bank deposits.
The European Central Bank (ECB) secured pivotal parliamentary backing on Tuesday for the launch of a digital euro, an electronic payment system designed to reduce the euro zone’s dependence on American credit card networks amid growing transatlantic tensions.
Six years in development, the digital euro, essentially an electronic wallet guaranteed by the central bank but distributed through commercial banks or fintech companies, will allow all euro zone residents to make payments both online and in person.
The approval of draft rules by the economic committee of the European Parliament comes after three years of difficult negotiations between the ECB and commercial banks, which had expressed concerns about potential deposit outflows and lost revenue.
A response to geopolitical risks
The push for a digital euro has gained urgency since Donald Trump returned to the White House, imposing tariffs on established trade partners including the European Union and raising fears that Washington could one day weaponize its dominance over payment networks like Visa and Mastercard.
According to the draft regulation approved by the committee, “The introduction of the digital euro would reduce overreliance on non-European providers by becoming a pan-European means of payment and would bring the single currency into the digital era by giving Union citizens the freedom to opt to pay with central bank money in their daily transactions.”
The ECB has outlined a phased approach to the digital euro’s introduction. The central bank would first release the CBDC for person-to-person and e-commerce transactions, followed by support for online and offline digital euro payments at points of sale. Later phases would include person- or business-to-government payments, along with taxes and customs duties.
According to an ECB presentation published online, multiple use cases are needed to address the variety of end-user needs and market gaps across European Economic Area countries. These measures aim to respond to a landscape with different payment behaviors and preferences across the continent.
