European policymakers are intensifying their push for a digital euro as concerns grow over the region’s dependence on non-European payment providers.
According to senior officials at the European Central Bank, the current payment landscape leaves Europe exposed to external risks at a time of rising geopolitical and trade tensions.
Key Takeaways
The ECB says Europe needs a digital euro to reduce reliance on foreign payment systems.
A pilot is planned for 2027, with possible issuance around 2029.
Stablecoins are seen as a financial stability risk, strengthening the case for a public digital euro.
The issue is not only technological, but strategic. Payments are increasingly viewed as critical economic infrastructure, and reliance on systems controlled outside the euro area is now being framed as a long-term vulnerability.
Payments Dependence Seen as a Structural Risk
Speaking in Rome, ECB Executive Board member Piero Cipollone warned that Europe’s reliance on foreign payment networks is already significant and set to grow if no action is taken. He described payment systems as essential to the day-to-day functioning of the economy, arguing that postponing solutions would effectively lock in a structural weakness.
For years, the ECB has argued that Europe’s retail payments ecosystem is dominated by international players such as Visa, Mastercard, and PayPal. Recent trade tensions and renewed protectionist rhetoric from the United States have only amplified concerns about overreliance on U.S.-based financial infrastructure.
Digital Euro Timeline Takes Shape
Cipollone reaffirmed that the digital euro project is progressing steadily, with a pilot phase expected to begin in 2027. Full issuance could follow around 2029, assuming the necessary legal and political groundwork is completed.
While external developments have sharpened the debate, ECB officials stress that the initiative is rooted in the institution’s core mandate. The central bank sees ensuring the smooth functioning of payment systems as a fundamental responsibility, particularly when dependence on external providers reaches a level that could pose systemic risks.
From Domestic Tool to Global Infrastructure
The primary focus of the digital euro remains the euro area itself, offering households and businesses a public, digital form of central bank money alongside cash. However, Cipollone noted that once the infrastructure is in place, it could eventually be extended to facilitate payments with countries outside the euro zone.
Such an expansion could strengthen the euro’s role internationally, though officials emphasize that this is a secondary consideration rather than the project’s main objective.
Political Hurdles Still Remain
The ECB first launched its digital euro initiative in 2021, but the project has moved slowly through the political process. Although the European Commission proposed a legal framework in 2023 and EU member states agreed on a common position late last year, the European Parliament has yet to finalize its stance.
Some lawmakers remain skeptical, arguing that private-sector solutions could achieve similar goals without introducing a new form of central bank money.
Stablecoins Add Urgency to the Debate
Cipollone also addressed the rise of stablecoins, which have gained political backing in the United States, including from President Donald Trump. International institutions such as the International Monetary Fund have warned that widespread stablecoin adoption could disrupt bank lending, weaken monetary policy transmission, and trigger instability in sovereign debt markets.
Against that backdrop, ECB officials argue that Europeans should be offered a simple, reliable public alternative rather than relying on privately issued digital money.
The central bank’s preferred approach is a balanced system in which public money and private innovation coexist – anchored by a digital euro that keeps monetary sovereignty firmly within Europe.
