EU lawmakers advance legal framework for digital euro

European lawmakers moved the digital euro project further ahead after the European Parliament’s Committee on Economic and Monetary Affairs approved the Single Currency Package on Tuesday, including legislation to create a legal framework for a digital version of the euro and a separate proposal to protect the role of cash. The digital euro file passed by 43 votes to 14, with one abstention. Lawmakers said the central bank digital currency would be issued by the European Central Bank and designed to work both online and offline, with offline functionality relying on local storage devices and framed as comparable to using cash. The package also includes privacy assurances, with officials saying technologies such as zero-knowledge proofs would help protect transactions and that the ECB would not have access to identification data. At the same time, the legislation seeks to address political concerns that a digital euro could undermine notes and coins. The cash proposal would require euro-area countries to preserve broad acceptance and access, prevent businesses from rejecting cash payments, and ensure member states monitor availability, particularly for vulnerable groups such as elderly and unbanked people. Fernando Navarrete Rojas, the European Parliament’s lead rapporteur on the digital euro, said the package is meant to preserve citizens’ freedom to choose how they pay and that the digital euro would complement cash rather than replace it. The committee vote is an important step in the EU’s legislative process, with adoption expected by the end of 2026. It also clears the way for further work on the digital euro’s final design and a more technical next phase at the ECB, which Christine Lagarde said should lead to a pilot phase. The push comes as European officials highlight competition from dollar-backed stablecoins and U.S.-dominated payment systems, while U.S. lawmakers pursue measures that would block a digital dollar until 2030.