ECB secures key parliamentary backing for digital euro
European Central Bank Moves Forward with Digital Euro Initiative
Background and Motivation
FRANKFURT, June 23 (Reuters) - The European Central Bank secured key parliamentary backing on Tuesday for the launch of a digital euro, an electronic means of payments aimed at making the euro zone less reliant on U.S. credit cards at a time of fraying transatlantic relationships.
The digital euro, essentially an electronic wallet guaranteed by the central bank but marketed by banks or fintech companies, will allow all euro zone residents to make payments online and in person.
Geopolitical Context
Six years in the making, the ECB's digital cash has become a more pressing issue since Donald Trump returned to the White House, slapping tariffs on even established trade partners such as the European Union and raising fears that the U.S. could one day weaponize its dominance over payment networks like Visa and Mastercard.
Legislative Progress
The approval of draft rules by the economic committee of the European Parliament comes after three years of wrangling between the ECB and banks, which have been concerned about deposit outflows and lost revenues and sought to limit the scope of the project.
Draft Regulation Details
"The introduction of the digital euro would... reduce overreliance on non-European providers by becoming a pan-European means of payment and would bring the single currency into the digital era by giving Union citizens the freedom to opt to pay with central bank money in their daily transactions," the draft regulation says.
Political Opposition
Siegbert Frank Droese of the far-right Europe of Sovereign Nations, a political group in the European Parliament, said his group had voted against the proposal, raising the likelihood that a further vote would be needed at the Parliament's plenary.
Next Steps and Timeline
Barring an objection there, lawmakers should start negotiating with EU governments and the European Commission next month, aiming for final approval by the end of the year.
The ECB plans to run a 12-month pilot of the digital euro starting in the second half of next year before a full launch in 2029.
(Reporting by Francesco Canepa and Valentina Za; Editing by Andrew Heavens and Susan Fenton)
