Key points
- EU finance ministers aim to agree on a common position for a digital euro on Friday.
- The digital euro aims to reduce dependence on US-based payment systems, such as Visa and Mastercard.
- Legislative hurdles remain in the European Parliament, delaying full implementation.
- The ECB hopes for legislation to be finalized in the first half of 2026.
European Union finance ministers convened in Copenhagen on Friday to forge a unified stance on the creation of a digital euro. This digital currency, envisioned as a viable alternative to dominant US payment processors such as Visa and Mastercard, is a key component of the EU’s broader strategy to lessen its reliance on other nations in crucial sectors, including finance.
The initiative, which has been under discussion for six years, has gained significant momentum this year due to the EU’s increasing focus on strategic autonomy.
Spanish Finance Minister Carlos Cuerpo emphasized the urgency of establishing an independent digital payment system, highlighting the need to reduce dependence on external providers. He highlighted the growing political will to accelerate progress on this front.
While political support for the digital euro is widespread, the project faces legislative hurdles. The European Parliament has yet to pass the necessary legislation, citing a need for further refinement of certain details.
Despite these delays, the European Central Bank (ECB) remains optimistic, projecting that all necessary legislation could be in place by the first half of 2026. EU Economic Commissioner Valdis Dombrovskis further emphasized the importance of a pan-European payment system in strengthening the EU’s strategic autonomy in the increasingly digital landscape of online commerce.
The ECB’s proposed digital euro would function as a central bank-backed online wallet, offering a payment method independent of US-based giants like Visa, Mastercard, and PayPal.
However, concerns remain. Some lawmakers and bankers have voiced apprehension about the potential negative impact on the banking sector and the possibility of instability, including the risk of digital bank runs. Even after parliamentary approval, the ECB estimates that it will take an additional two to three years to launch the digital euro fully.
Despite these challenges, the EU remains committed to this project, considering it crucial for both technological advancement and strategic autonomy.
