European Parliament advances digital euro to counter US payment dominance

The European Parliament's Economic and Monetary Affairs Committee has approved a digital euro proposal, a move designed to bolster European financial autonomy and reduce reliance on US payment systems. The digital currency, expected to launch by 2029, aims to counter the dominance of US dollar-denominated payment infrastructure, where Visa and Mastercard currently account for 61% of card payments in the euro area.

The digital euro would function as a digital form of central bank money, issued and backed by the European Central Bank (ECB), complementing rather than replacing cash and existing banking services. Consumers would be able to hold digital euros in a dedicated wallet, subject to an as-yet undetermined spending limit, with the system supporting both online and offline payments and offering a high degree of privacy.

The ECB would provide the underlying infrastructure, while commercial banks and payment service providers would offer services to customers. The ECB welcomed the committee's position, stating it safeguards euro cash while shaping the digital euro.

Globally, other nations are also developing digital currencies, with China having introduced its digital yuan and Russia planning to operationalize its digital rouble in September 2026. The United States, under President Donald Trump, has shifted focus from a Federal Reserve-issued digital currency to supporting stablecoins.

The European Parliament is expected to formalize the committee's position in early July, followed by negotiations with the 27 EU member states, with a final agreement targeted before the end of the year.