CBDC | European Parliament Backs Digital Euro to Reduce U.S Dollar Stablecoin Dominance in Payments

The European Parliament’s Economic and Monetary Affairs Committee has approved the long-awaited digital Euro proposal moving the European Central Bank’s central bank digital currency (CBDC) project a step closer to reality.

The initiative is designed to strengthen Europe’s payment sovereignty and reduce the region’s reliance on U.S.-based payment networks such as Visa and MasterCard.

Lawmakers backed legislation that would allow the digital Euro to function as a public digital form of money, available for both online and offline payments across the Euro area. The proposal includes safeguards aimed at addressing concerns from commercial banks, including holding limits and restrictions intended to prevent large-scale deposit outflows.

“We welcome that the European Parliament’s ECON Committee has agreed on its position on the single currency package, which will safeguard euro cash as legal tender while also shaping the digital euro,” the ECB said in a statement.

“The approval of the regulation on the digital euro is a major victory for citizens and small businesses,” said the Italian MEP Pasquale Tridico, who negotiated the file on behalf of The Left group, describing the vote as “historic”.

Supporters argue that the digital Euro is necessary to strengthen European monetary sovereignty, reduce fragmentation in the bloc’s retail payments market, and provide a European alternative to foreign-controlled payment infrastructure. The push has gained urgency amid growing geopolitical tensions and concerns over Europe’s dependence on non-European payment providers.

The proposal still requires approval from the full European Parliament and further negotiations with EU member states before becoming law. If adopted, the ECB is expected to begin pilot testing in 2027, with a potential launch targeted for 2029.

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