EU governments agree on common position for digital Euro
European Union governments have agreed on a common position for the digital euro, marking a significant step toward strengthening the bloc’s monetary sovereignty and reinforcing the euro’s role in global finance amid the prominence of U.S. dollar-denominated stablecoins.
- The ECB launched its digital euro initiative in 2021, and the European Commission submitted a proposal in 2023.
- Member states took over two years to reach agreement on a common approach.
- The next step requires the European Parliament to finalize its position before formal negotiations with the Council can begin.
“The digital euro is an important step toward a more robust and competitive European payment system, and can contribute to Europe’s strategic autonomy and economic security,” Danish Economy Minister Stephanie Lose said Friday, noting Denmark currently holds the Council’s rotating presidency.
The EU Council’s mandate emphasizes that both online and offline versions of the digital euro are essential and should be available from the initial issuance, aligning with the European Central Bank’s (ECB) stance. This contrasts with proposals from some lawmakers, including Fernando Navarrete, who suggested an online-only model if the private sector provides alternatives.
The ECB launched its digital euro initiative in 2021, and the European Commission submitted a proposal in 2023. Member states took over two years to reach agreement on a common approach. The next step requires the European Parliament to finalize its position before formal negotiations with the Council can begin.
Provided an agreement is reached next year, the ECB may launch a pilot phase in 2027, with a potential full rollout targeted for 2029, according to Bloomberg. EU officials have highlighted concerns about over-reliance on U.S. payment firms such as Visa, Mastercard, and PayPal, as well as the potential entry of stablecoins promoted by U.S. interests.
To safeguard financial stability, governments stressed the importance of customer holding limits, previously agreed upon by euro-area finance ministers, which envision close cooperation between the ECB and the Council. The Council also outlined a framework for compensating payment service providers, including capped interchange and merchant fees during a transitional five-year period, with fee caps thereafter based on actual digital euro costs.
With these steps, the EU is moving closer to creating a digital currency framework that balances innovation, security, and strategic autonomy for the eurozone.
