The European Parliament has officially endorsed a negotiating framework for a digital euro, paving the way for the ECB to issue a CBDC to reduce reliance on USD Peg stablecoins that dominate global cryptocurrency payments.
The vote represents a significant political step for the EU toward implementing a digital euro, amid increasing dollarization of crypto payments through stablecoins and policymakers' desire to protect monetary sovereignty.
- The European Parliament approved the negotiating mandate, allowing for continued work with the EU Council and the European Commission.
- The design is focused on both online and offline aspects, aiming for a cash-like experience and increased resilience to disruptions.
- The main policy impetus stems from the dominance of USD stablecoins in payments and crypto liquidation .
The European Parliament is pushing forward with the legislative process for a digital euro.
The European Parliament voted in favor of adopting the negotiating mandate, paving the way for negotiations with the EU Council and the European Commission to resume.
According to reports, the vote resulted in 429 votes in favor, 109 against, and 44 abstentions, thus supporting a negotiating mandate previously agreed upon by EU finance ministers.
This move helps Parliament "align" its position with EU governments and is XEM as the most significant political progress of the digital euro project to date.
The design framework emphasizes the ability to be used online and offline like cash.
According to the agreed framework, the digital euro will be a CBDC issued by the ECB, having legal status equivalent to cash and capable of payment both with and without internet access.
Within the agreed framework , the digital euro is described as a central bank digital currency, having the same “legal tender” status as cash. The design focus is on usability both online and offline.
With offline mode, users can make payments without an internet connection using technologies such as NFC or hardware wallets. This approach aims to ensure operational capability in situations of network disruption while creating a payment experience closer to cash.
Supporters argue that offline functionality is particularly important for resilience and privacy, especially for small-value transactions and during periods of system failure.
"The digital euro must be usable anytime, anywhere, online or offline."
– Stefan Berger, Member of the European Parliament (MEP), head of the Parliament's negotiating team on this issue.
USD Peg stablecoins are dominating crypto payments and shaping policy rationales.
The EU is promoting a digital euro amid the dominance of USD Peg stablecoins in the market, making cryptocurrency payments increasingly dependent on private instruments and foreign currencies.
The legislative impetus is set against the backdrop of strong "dollarization" in crypto payments. Data from CoinGecko shows that USD-denominated stablecoins account for over 90% of the global stablecoin market.
The total market Capital of the stablecoin sector is stated to be over $300 billion. Token such as Tether 's USDT and Circle 's USDC dominate both centralized exchanges and on-chain payments, with a combined market Capital of nearly $260 billion.
Meanwhile, euro Peg stablecoins remain small, with a combined total value of less than $1 billion. EU officials have repeatedly positioned a digital euro as a way to reduce reliance on private foreign currency payments and protect monetary sovereignty as crypto adoption increases.
The rollout roadmap is still long, with the earliest possible release around 2029.
Despite the political impetus, the digital euro still needs further decisions from the ECB and legislative progress; the launch date has been mentioned as around 2029.
The ECB is expected to decide in the coming months whether to move the digital euro to the next stage of development. Prior to that, a two-year investigation concluded the project was technically feasible.
However, even if the legislative process goes smoothly, officials say the launch is likely to happen sometime around 2029. Therefore, the current vote reflects political momentum rather than immediate implementation.
While USD Peg stablecoins continue to solidify Vai as the “default payment layer” in the crypto market, the effort to create a digital euro is increasingly XEM as a strategic response to a globalized payments landscape centered around the USD.
Conclude
The EU is accelerating the digital euro movement amid the growing dominance of USD stablecoins in cryptocurrency payments. This offline focus allows the CBDC to approach the Vai of cash, rather than directly competing with volatile crypto assets.
Frequently Asked Questions
What is a digital euro?
This is a central bank digital currency (CBDC) issued by the European Central Bank, designed to have the same legal status as cash under the current discussion framework.
Why is the EU pushing for a digital euro right now?
One major reason is that USD Peg stablecoins account for over 90% of the global stablecoin market, making crypto payments increasingly dependent on private instruments and foreign currencies, thereby highlighting the issue of monetary sovereignty.
What does the offline payment feature mean?
Offline payments allow for transactions without an internet connection, using technologies such as NFC or hardware wallets. Supporters see this as a core element for increased disruption resilience and enhanced privacy for small-value transactions.
When might the digital euro be launched?
Although still subject to the ECB's decision and the legislative process, officials have indicated that the launch is likely to be around 2029.
