ECB faces legal challenges over digital euro's basis and distribution rules

European Central Bank officials and EU legislators are confronting questions about the legal foundation of the digital euro. ECB board member Piero Cipollone cited Article 133 of the Treaty on the Functioning of the EU as the authorising provision, but admitted uncertainty and pointed to the ECB’s own legal service for clarification. Critics note that Article 133 governs the use of existing euro, not the creation of a new central‑bank money form, and argue that Articles 127(2) and 128 would be more appropriate. The European Parliament’s Economic and Monetary Affairs Committee opened trilogue negotiations on the regulation in June 2026, while the Court of Justice of the EU remains the ultimate arbiter of treaty interpretation.

The proposed regulation also creates an asymmetry in how the digital euro could be distributed outside the euro area. Distribution to third‑country states would require a Council‑authorised international agreement, whereas distribution to non‑euro‑area EU member states would only need a bilateral arrangement between the ECB and the national central bank, without Council or parliamentary involvement. This differing treatment raises concerns about monetary sovereignty and the practical capacity of the EU to control the digital euro beyond its borders.