The Committee on Economic and Monetary Affairs (ECON) of the European Parliament approved on Tuesday its negotiating position on the legislative package concerning the digital euro and the single currency regime, paving the way for upcoming negotiations with the Council of the EU.

According to a related announcement, the legislative package for the introduction of the digital euro was approved with 43 votes in favor, 14 against, and one abstention.

As noted, the digital euro will be an electronic form of money issued by the European Central Bank (ECB) and will be usable both online and offline. Online transactions will be based on an account system, while offline payments will be made directly through local storage devices. More specifically, the offline functionality will be similar to using physical cash, as the loss of the device will also result in the loss of the funds stored on it, with no possibility of recovery.

The European Parliament notes that the new system will incorporate the principles of “privacy by design” and “privacy by default.” The use of technologies such as “zero-knowledge proofs” is envisaged to enable the verification of transactions without revealing personal data. The ECB will not have access to users’ identification data.

According to the proposal, all payment service providers, including banks, electronic money providers, postal services, and licensed crypto-asset service providers, will be able to offer the digital euro throughout the EU.

Most businesses will be required to accept the digital euro, with exceptions for the self-employed and small or micro-enterprises that do not accept other forms of digital payments. It will also be available to visitors and tourists, as well as—under certain conditions—to people residing outside the eurozone.

The announcement states that basic services, such as opening an account, holding and managing funds, and providing at least one payment method, will be provided free of charge. Offline transactions will also be free of charge.

For reasons of financial stability, a cap is proposed on the amount of digital euros that any individual may hold. MEPs propose that the limit be set by the Commission, following a recommendation from the ECB, and be reviewed at least every two years. At the same time, businesses will not be allowed to hold digital euros beyond the period required to process incoming payments, which is up to 24 hours.

According to the European Parliament, before the introduction of the digital euro, the ECB must finalize the regulatory framework, develop the necessary infrastructure, and conduct pilot tests. Following the adoption of the legislation, a transition period of at least 24 months is envisaged to allow banks, service providers, and users to adapt. It should be noted that governments and service providers will launch public awareness campaigns.

At the same time, the Committee on Economic and Monetary Policy approved a second legislative package concerning the distribution of the digital euro by payment service providers established in Member States outside the euro area, with 43 votes in favor, 9 against, and 6 abstentions.

A third package on the legal tender status of euro banknotes and coins was also approved, with 46 votes in favor, 4 against, and 8 abstentions. The proposal stipulates that eurozone member states must ensure access to cash and prepare for potential disruptions to digital payment systems. At the same time, businesses will not be allowed to prohibit the use of cash through signs or standard contract terms. Member states should also regularly monitor the availability of cash, paying particular attention to vulnerable groups, such as the elderly, people with low incomes, and those without bank accounts.

In a statement included in the press release, the European Parliament’s rapporteur, Fernando Navarrete Rojas (EPP), stated that the digital euro will complement cash rather than replace it, while emphasizing that the goal is to provide a secure, resilient, and European digital payment option with built-in privacy safeguards.

According to the European Parliament, the negotiating mandates for the three legislative texts are expected to be announced at the start of the plenary session in July, to be followed by negotiations with the Council of the EU prior to the final adoption of the legislation.