The digital euro, the green light for the Committee on Economic and Monetary Affairs to negotiate

The European Parliament’s Economic and Monetary Affairs Committee has given its approval to the negotiating mandate for the legislation surrounding the digital euro. This decision was reached with 43 votes in favor, 14 against, and one abstention. The committee's position will now form the basis for negotiations with the Council of the European Union, which will begin on July 13 under Ireland’s presidency. If at least 72 Members of the European Parliament object, the text will need to be confirmed in a full plenary session scheduled for July 6–9 in Strasbourg.

Among the new elements included in the adopted position are requirements that businesses must accept payments in digital euros, with exceptions for micro and small enterprises and non-profits. These exemptions apply only if these entities do not already accept other payment methods such as debit cards, instant payments, or other technological solutions for proximity payments. Additionally, the committee proposed a gradual introduction of the digital euro two years before its official launch. This would allow intermediaries, merchants, and users time to prepare for the use of the new currency. The European Central Bank (ECB) is also required to publicly announce the planned date of the official launch.

The ECB welcomed the approval, stating that the position on the single currency package “will protect cash in euros as a legal means of payment while simultaneously shaping the digital euro.” The ECB expressed eagerness for the European Parliament to adopt its final position.

Reactions from various political figures highlight differing perspectives on the implications of this development. Giovanni Crosetto, an MEP from Brothers of Italy-ECR and vice-coordinator of the ECR group in the Economic and Monetary Affairs Committee, emphasized that today’s shift represents a concrete response to objective risks. He pointed to the risk of private sector dominance in payments, currently dominated by American providers, and the potential penetration of stablecoins into the market, which could lead to dollarization in Europe. Crosetto noted that the vote ensures the continued use of physical cash without limitations and that transaction costs will remain lower than current levels for merchants, a direction his group has consistently supported.

Forza Italia also celebrated the outcome. Marco Falcone, an MEP and deputy head of delegation, stated that the digital euro will mark a turning point for Europe, reinforcing European monetary sovereignty and independence. Similarly, Nicola Zingaretti, leader of the Democratic Party delegation in the European Parliament, viewed the digital euro as a step forward for a stronger, more autonomous Europe. He stressed the importance of reducing reliance on foreign infrastructure and highlighted the need for European sovereignty in payments, emphasizing the necessity of a public, secure, accessible digital currency centered around privacy protection.

Pasquale Tridico, the head of the Five Star Movement delegation to the European Parliament and the sole Italian rapporteur for the regulation, did not provide specific comments but is expected to play a pivotal role in the upcoming negotiations.

According to reports, the European Central Bank plans to initiate experiments with the digital euro in 2027, with the official launch anticipated by 2029. This timeline allows ample time for preparation and testing before the full implementation of the digital currency. The approval by the Economic and Monetary Affairs Committee marks a significant milestone in the legislative process, setting the stage for detailed negotiations with the Council of the European Union.

As the negotiations proceed, the focus will likely center on balancing the interests of various stakeholders, including financial institutions, small businesses, consumers, and regulatory bodies. Ensuring the smooth transition to a digital currency while maintaining the integrity of the existing financial system will be critical. The discussions will also address concerns related to privacy, security, and the prevention of monopolistic practices in the digital payment space.

Looking ahead, the successful adoption of the digital euro could have far-reaching implications for the European economy. It may enhance financial inclusion, reduce transaction costs, and strengthen the EU’s position in the global financial landscape. However, challenges such as ensuring widespread acceptance, addressing technical issues, and managing potential disruptions in the traditional banking sector will require careful planning and coordination among all involved parties.