EU lawmakers backed rules for an offline and online digital euro, with privacy safeguards, holding limits and no interest payments.
The creation of an EU-issued digital euro moved a step closer Tuesday after a key European Parliament committee vote.
The EP's Economic and Monetary Affairs Committee (ECON) approved its position on the digital euro package with a 43–14 vote, according to an official announcement on Tuesday.
Fernando Navarrete Rojas, a member of the European Parliament (MEP), said the package “protects citizens’ freedom to choose how they pay,” adding that the digital euro would “complement cash, never replace it.”
The vote marks a key step in shaping the rules for the EU’s potential central bank digital currency (CBDC), as the European Central Bank (ECB) targets a 2029 digital euro launch.
Under the approved draft, the digital euro would be issued by the ECB and function both online and offline.
Online payments would use an account-based system, while offline payments would operate through local device storage, similar to cash in terms of user control.
“The offline functionality would be equivalent to using physical cash, as losing the device would mean losing the offline money with no refund possible,” the announcement read.
The proposal includes privacy-by-design features, including technologies such as zero-knowledge proofs (ZKPs) to verify transactions without exposing personal data. “The ECB would not have access to personal identification data,” the announcement said.
The draft also introduces holding limits to protect financial stability, with caps on how much digital euro individuals can hold. These limits would be set by the European Commission based on ECB recommendations and reviewed regularly.
The currency would not pay interest, and businesses would only be allowed to hold digital euros temporarily to accumulate incoming payments for up to 24 hours. Businesses would generally be required to accept the digital euro, with some exceptions for very small firms and self-employed operators who do not already accept digital payments.
Related: ECB signs standards deals to cut digital euro integration costs
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