EU parliament committee backs digital euro to break US payment dominance

The European Parliament's committee on economic and monetary affairs voted on Tuesday to endorse the legal framework for a digital euro, the most concrete step yet toward a central bank digital currency that Brussels hopes will loosen the grip of Visa, Mastercard, Apple Pay and Google Pay on everyday payments across the single currency area.

The approval sends the file to a plenary session expected in July, where lawmakers could still force a full assembly vote. If the Parliament and the Council of the EU agree on a final text after summer negotiations, the European Central Bank (ECB) says it can run a pilot in mid-2027 and offer the digital euro to the public by 2029.

Why Brussels wants a European payment rail

The political impulse is straightforward: Europe has no home-grown, pan-European scheme for card or mobile payments. According to the ECB, nearly two-thirds of card transactions in the euro area run on networks owned by US companies, and 13 of the 21 member states that use the euro have no national alternative for shop or online purchases. That concentration leaves European consumers and merchants exposed to foreign commercial decisions and, potentially, to foreign political pressure.

Gilles Boyer, a centrist MEP, put it bluntly after the committee vote: "Payment systems are not neutral but instruments of power. We, Europeans, have had many wake-up calls about our dependence on the US. We're fully awake now, but we're not always acting." The digital euro, he argued, would make "a sovereign, pan-European payment solution a reality."

The geopolitical trigger: ICC sanctions and payment sovereignty

EU officials repeatedly cite the 2025 US sanctions against judges of the International Criminal Court as the clearest illustration of that vulnerability. French judge Nicolas Guillou described how he lost access to his Visa card after Washington designated ICC personnel. The episode demonstrated that a US administration can, in effect, switch off a European citizen's ability to pay by pressuring a US-dominated network. For the Commission and the ECB, the digital euro is "a chance to end a dependence we have lived with for too long," in the words of Alessandro Giovannini, adviser to the ECB's digital euro director.

The argument is not purely defensive. A European Central Bank liability that can be used offline, peer-to-peer and without a commercial intermediary would also give the Eurosystem a direct monetary policy transmission channel, something it lacks today when most retail payments are intermediated by private schemes.

How the digital euro would work

The digital euro would not sit in a commercial bank account. Instead, each user would open a digital euro wallet with a bank or a public institution such as a post office, fund it from an existing account or with cash, and then spend it in shops, online or person-to-person using a card, a phone app or a wearable. The ECB insists the value is fixed one-to-one with physical euro notes and coins.

Privacy is a design pillar. The central bank would not see the identity behind individual transactions, and an offline mode would offer cash-like anonymity. "It wouldn't replace anything. Cash would still be available, and people could use existing private payment methods," Giovannini said. The European consumer organisation BEUC welcomed the committee's text, noting that lawmakers had added "more protections" for users.

Banks count the cost and warn of deposit flight

The banking industry remains the loudest sceptic. A report published in April by the European Banking Federation put the one-off cost of adapting core banking systems, compliance infrastructure and customer onboarding at €18 billion (about $20 billion). The ECB's own estimate is far lower: €4, 5.8 billion in investment across the sector. The gap reflects different assumptions about how much existing architecture can be reused versus rebuilt.

Beyond cost, lenders fear a structural shift. If households and firms move significant balances into risk-free central bank wallets, commercial bank deposits, the foundation of their lending capacity, could shrink. Giovannini argues the design prevents that outcome: holding limits and a non-remunerated structure mean "the digital euro wouldn't cause these risks, even in extreme and unlikely crisis situations." Banks also worry the new rail will compete with Wero, the pan-European instant payment initiative they have backed as a private-sector answer to US dominance.

Timeline and next legislative steps

The committee vote is a milestone, not a finish line. The Parliament must still confirm its position in plenary, likely in July. After the summer recess, trilogue negotiations between the Parliament, the Council and the Commission will begin. The ECB has said it needs the regulation adopted by the end of 2026 to keep its internal schedule: a two-year preparation phase, a pilot launch in mid-2027, and a decision on full issuance by 2029.

That timeline is tight. The regulation must resolve outstanding questions on holding limits, the role of non-bank payment service providers, the exact offline technology standard, and the governance of the scheme rulebook. Any of those could become a sticking point in trilogues, especially if member states with strong national card schemes, such as France with Cartes Bancaires, push for carve-outs.

What success would look like

For the Eurosystem, success means a digital euro that is widely accepted at point of sale and online, used routinely for peer-to-peer transfers, and trusted enough that Europeans reach for it as naturally as they do a contactless card today. That requires merchant acquiring contracts, terminal software updates, consumer education and a brand that signals reliability rather than novelty. The ECB's Giovannini acknowledged the pace: "Banks and merchants need time to prepare so they can roll it out smoothly and at scale."

If the digital euro remains a niche product, used by a few privacy-conscious early adopters but ignored by the mass market, the strategic rationale collapses. The US networks would retain their de facto monopoly, and the next geopolitical shock would find Europe in the same position as in 2025. The coming 18 months of legislative detail and industry preparation will decide which outcome materialises.