The European Union has moved a step closer to introducing the digital euro after the European Parliament approved its negotiating position, clearing the way for final discussions with member states on the proposed digital currency.

The vote in Strasbourg marks the beginning of the last phase of negotiations between the European Parliament and EU governments. Lawmakers and national representatives are expected to focus on several complex issues, including how banks and payment providers will be compensated for offering digital euro services and how transaction fees will be distributed across the payment system.

The digital euro is planned as an electronic version of central bank money issued and guaranteed by the European Central Bank (ECB). Officials have repeatedly stressed that the new currency is intended to complement physical cash rather than replace it, while also working alongside existing banking and payment services.

Under the proposal, consumers would be able to store digital euros in a dedicated electronic wallet. A maximum holding limit will be introduced, although the exact amount has not yet been decided.

The system is expected to support both online and offline payments, allowing transactions even when internet access is unavailable. Privacy has also been presented as a key feature of the project. According to the proposal, the ECB will operate the underlying infrastructure but will not be able to directly identify users through their payment data.

Commercial banks and payment service providers will be responsible for offering digital euro accounts and related services to individuals and businesses, creating a partnership between the central bank and the private financial sector.

According to sources familiar with the negotiations, the most challenging issue remains the compensation model. Negotiators must determine which financial institutions will receive payments for providing digital euro services, how much compensation they should receive and how those payments will be financed.

Another important topic is the distribution of transaction fees throughout the payment chain. Current proposals suggest merchants would pay lower fees than those typically charged for traditional card payments, a move that supporters believe could reduce business costs and encourage wider adoption of digital payments.

The negotiations are expected to intensify during the autumn as lawmakers seek to resolve outstanding disagreements before presenting the final legislation.

If agreement is reached, EU institutions aim to grant final approval before the end of the year. The European Central Bank is expected to begin a pilot programme in 2027 to test the system before a wider public rollout.

Current plans envisage the digital euro becoming available for everyday retail payments in 2029. European officials view the initiative as an important step toward strengthening the region’s payment infrastructure, improving financial resilience and providing consumers with a secure public digital payment option in an increasingly cashless economy.

The outlook for the global economy during the remainder of the year will depend largely on whether the fragile peace agreement between the United States and Iran survives, according to a new analysis by Oxford Economics, which says the deal could determine the direction of inflation, energy prices and financial markets.

After a first half marked by conflict in the Middle East, volatile oil prices and rapid growth in artificial intelligence investments, the consultancy believes the next six months will be influenced by a series of interconnected risks, with the US-Iran truce standing at the center.

Chief Global Economist Ryan Sweet said the durability of the agreement would determine whether the global economy benefits from lower energy costs or faces another oil-price shock.

Oxford Economics forecasts global annualized economic growth of 3.1 percent during the second half of the year, compared with an estimated 1.6 percent in the first six months. The projection assumes oil prices remain relatively stable, supporting consumer spending and easing inflationary pressures. However, Sweet described the chances of the peace agreement holding as no better than “a coin flip.”

The report expects Brent crude to average in the low $70s per barrel if the agreement remains intact. A breakdown, however, could trigger higher inflation, tighter financial conditions and renewed pressure on global supply chains.

Those concerns intensified after fresh military exchanges on Wednesday. The United States launched strikes against Iran following allegations that Tehran had attacked three commercial vessels in the Strait of Hormuz. Iran responded with strikes targeting Bahrain and Kuwait, raising fears that the ceasefire could unravel.

Oil markets reacted quickly, with Brent crude climbing above $78 a barrel after rising more than six percent during trading.

Oxford Economics said any disruption would extend well beyond energy markets. Higher oil prices could increase production costs for technology companies, disrupt semiconductor supply chains across Asia, complicate central bank policy decisions and influence political developments, including upcoming elections in the United States and Israel.

The consultancy’s outlook differs from several other major forecasts. Morgan Stanley expects crude prices to approach $90 a barrel by year-end, while the World Bank projects Brent crude to average around $94 this year and anticipates global economic growth slowing to 2.5 percent in 2026.

Oxford Economics identified shipping activity through the Strait of Hormuz as one of the clearest indicators of whether the peace agreement is holding. The report said a sustained recovery in vessel traffic by mid-July would strengthen confidence in the deal.

Beyond geopolitics, the report highlighted growing risks surrounding the artificial intelligence sector. The Bank for International Settlements recently warned that rapid expansion in AI investment has become increasingly dependent on private credit and complex financing arrangements outside the traditional banking system.

Oxford Economics also modeled a scenario in which US technology stocks fall by 25 percent over one year. According to Sweet, such a correction would bring US economic growth close to a standstill and reduce global growth by more than one percentage point.

Despite these risks, the consultancy said stronger AI-driven productivity and resilient economic activity in Europe could provide support if geopolitical tensions ease and energy markets stabilize during the second half of the year.