EU finance ministers agreed on Friday to move forward with plans for a digital euro, a project designed to reduce Europe’s reliance on U.S.-based payment giants Visa and Mastercard.
The digital euro, envisioned as an electronic wallet backed by the European Central Bank (ECB), has become a hot topic this year as the EU looks to cut its dependence on foreign players in critical areas such as finance, energy, and defense.
The ECB has promoted the idea as a way to counter U.S. credit card dominance and as a response to Washington’s push for dollar-pegged stablecoins during Donald Trump’s presidency. However, progress has been slow, with lawmakers and banks warning it could drain bank deposits, be costly, or threaten user privacy.
Your completely free resource hub designed to boost your knowledge of cryptocurrencies
At a meeting in Copenhagen with ECB President Christine Lagarde and EU Commissioner Valdis Dombrovskis, the finance ministers reached a consensus on the next steps, marking a rare sign of momentum for the project.
EU Ministers Gain Role in Digital Euro Decision
EU finance ministers will now have a direct say in whether a digital euro is launched and how much each citizen can hold an important step to ease concerns about potential runs on bank deposits.
“The compromise that we reached is that before the ECB makes a final decision in relation to issuance…there would be an opportunity for a discussion in the Council of Ministers.”
Paschal Donohoe, who chairs the finance ministers’ meetings
Donohoe, alongside ECB President Christine Lagarde and EU Commissioner Valdis Dombrovskis, also welcomed a breakthrough on the process for setting holding limits, though they avoided sharing specifics. A participant told Reuters the ECB will submit its proposed cap for approval by the European Council of Finance Ministers.
Legislative Hurdles and Timeline
Despite the European Commission presenting draft legislation in June 2023, both the European Parliament and the European Council still need to approve it. The Council plans to complete its part by year’s end, while the ECB hopes for the full legislative framework to be ready by June. From there, it estimates a launch timeline of two-and-a-half to three years.
“The digital euro is not just a means of payment, it is also a political statement concerning the sovereignty of Europe and its capacity to handle payment, including on a cross-border basis, with a European infrastructure and solution.”
Christine Lagarde
While some EU countries already run national digital payment systems, none currently function across all 27 member states.
