European Union finance ministers have agreed on a roadmap to launch a digital euro currency, intended to be an alternative to the dominant U.S.-based Visa and Mastercard payment systems. The push for a digital euro—an electronic wallet backed by the European Central Bank—intensified this year as the EU seeks to reduce its reliance on other countries in key sectors like energy, finance, and defense.
The European Central Bank (ECB), the main sponsor of the project, has been promoting the digital euro as a way to lessen Europe’s dependence on U.S. credit cards and as a response to U.S. President Donald Trump’s global promotion of stablecoins pegged to the U.S. dollar. However, the ECB has so far failed to secure legislative approval due to concerns from lawmakers and bankers that the currency might deplete bank deposits, be too costly, or restrict privacy.
In a sign of progress, EU finance ministers, meeting with ECB President Christine Lagarde and European Commissioner Valdis Dombrovskis in Copenhagen on Friday, reached an agreement on the next steps. This new arrangement will give EU finance ministers a say on whether the digital currency is issued and on the holding limit for each resident. This is seen as a crucial step to alleviate fears of a run on bank deposits.
Next Steps and Legislation
Although the European Commission proposed the digital euro legislation in June 2023, the other two institutions that need to approve it—the European Parliament and the European Council—have not yet done so. The European Council aims to complete its part of the work by the end of the year. The ECB hopes to have the legislation in place by June, after which it will take an additional two and a half to three years to officially launch the digital euro.
Lagarde stated at a press conference, “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.”
