After a meeting of European Union finance ministers, Eurogroup President Paschal Donohoe said there’s been progress on legislation for the digital euro central bank digital currency (CBDC). The legislative work was interrupted by the European elections mid-last year, plus the member of parliament coordinating the legal drafting, Stefan Berger, stepped aside as he has reservations …
EU finance ministers signal urgency on digital euro amid Trump steps – ledgerinsights.com
After a meeting of European Union finance ministers, Eurogroup President Paschal Donohoe said there’s been progress on legislation for the digital euro central bank digital currency (CBDC). The legislative work was interrupted by the European elections mid-last year, plus the member of parliament coordinating the legal drafting, Stefan Berger, stepped aside as he has reservations about the digital currency.
Mr Donohoe said that the European Council (of governments), the Commission and Parliament have been working on a new draft and have made “good progress, but there are some areas that require further work.”
The Trump administration’s desire to expand the global usage of stablecoins has been used to stir backing for digital euro legislation, despite safeguards in the EU’s MiCA crypto regulations. MiCAR restricts the scale of foreign currency stablecoin usage and gives authorities intervention powers if monetary sovereignty is threatened. However, from the early days a key digital euro motivation of the European Central Bank (ECB) has been to reduce retail payment dependence on foreign companies such as Visa and Mastercard. President Trump’s April tariff announcements underlined that risk.
“We agreed again that this initiative is crucial, given the changing geopolitical landscape and the importance of diversification of strategically important payment systems,” said Mr Donohoe. “The sense of urgency for this project is increasing for ministers. So we agreed to speed up work and aim to find compromises on the remaining issues as soon as possible.”
The mention of Polish and Danish EU Council presidencies implies the aim is to finalize legislation this year.
The digital euro refers to a CBDC targeted at retail users. In the last couple of years there has been increasing interest in a wholesale CBDC (wCBDC) for institutional usage. During 2024 the European Central Bank, Eurosystem and 64 institutions participated in trials of three wholesale DLT settlement solutions, including a wCBDC solution from the Banque de France, DL3S. In February this year, the ECB announced plans for an interim solution, with the aim of introducing a wholesale CBDC as a longer term solution.
During a speech yesterday, Denis Beau, First Deputy Governor of the Banque de France, indicated that a wholesale CBDC will be launched first.
He said, “Our first objective is to develop a wholesale central bank digital currency (wCBDC) for use by market participants, followed by a CBDC for everyday retail payments (digital euro). Then, in the medium term, we need to develop a European unified ledger to modernise securities transactions.”
He continued, “The US authorities’ recent announcements in support of crypto-assets and stablecoins make it even more vital we complete this project, to maintain our monetary and financial sovereignty in the new world we are entering. The goal now is to move as quickly as possible from experimentation to operationalisation. Rest assured that the Banque de France and other Eurosystem central banks are working very actively and resolutely to complete this project.”
The complexity and potential societal impact of a retail CBDC is more significant than a wCBDC. Hence, it should be easier to roll out a wCBDC far quicker.
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