FRANKFURT — The European Central Bank took a significant step forward Tuesday, winning key support from a major parliamentary committee for the creation of a digital euro — an electronic payment system designed to make the euro zone less dependent on U.S.-based credit card companies at a time when transatlantic relations are under strain.
The digital euro would function as an electronic wallet backed by the central bank but distributed through traditional banks or financial technology companies. It would give all euro zone residents the ability to make purchases both online and in person.
The project has been in development for six years, but it has taken on new urgency since Donald Trump returned to the White House, imposing tariffs on longtime trade partners including the European Union. The move has fueled concerns that the U.S. could eventually use its control over major payment networks like Visa and Mastercard as a political tool.
Tuesday’s approval of draft rules by the economic committee of the European Parliament follows three years of back-and-forth between the ECB and the banking industry. Banks had raised concerns about losing deposits and revenue, and pushed to scale back the project’s reach.
The proposed regulation states that 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.”
Not everyone was on board. Siegbert Frank Droese, representing the far-right Europe of Sovereign Nations group in the European Parliament, said his group voted against the measure — raising the possibility that an additional vote may be required when the full Parliament meets in plenary session.
If no objection arises there, lawmakers are expected to begin negotiations with EU governments and the European Commission next month, with the goal of reaching final approval before year’s end.
The ECB is planning a 12-month pilot program beginning in the second half of next year, ahead of a full launch scheduled for 2029.
