The EU authorities have decided the time is ripe to reduce the dependence on foreign payment systems. On September 19, EU finance ministers agreed to move forward with the launch of a digital euro — an electronic wallet that would be managed by the European Central Bank and serve as a homegrown alternative to global giants like Visa and Mastercard.
This project is not just technical — it is symbolic. Beyond paying for coffee or shopping online, the digital euro is intended as a political statement. As ECB President Christine Lagarde presents it, this is a matter of sovereignty. In other words, the EU wants Europeans’ transaction data to stay in Europe, but not end up on servers in California.
However, launching the digital euro means navigating the EU’s usual multi-stage legislative process. The first draft law appeared in 2023, but it still has not been approved by either the European Parliament or the EU Council. Lawmakers hope to finalize the legal framework by mid-2026, with the currency itself potentially rolling out by 2029 at the earliest.
In the newly negotiated version of the proposal, finance ministers would have a say in key decisions — such as when to launch the currency and how much citizens can hold. These are not just formal details: limits on holdings are crucial to avoid triggering a mass shift of deposits from traditional bank accounts to digital euros, which could disrupt the banking system.
Discussion around the digital euro has picked up significantly this year. The reason is clear: the EU wants to reduce reliance on non-European players in sensitive areas such as energy, defense, and finance. For now, every time Europeans buy groceries, book a flight, or pay for coffee, their payment data flows through US-based platforms and foreign fintech giants.
Meanwhile, the rise of stablecoins, especially US dollar-based ones, is adding pressure. The ECB sees the digital euro as a timely response to this global trend. Still, before Europeans can actually use the digital euro in their wallets, many political and technical hurdles remain.
There are concerns from both banks and lawmakers. Banks worry that customers might move too much money out of traditional accounts, potentially weakening the financial system. Lawmakers are concerned about costs, privacy, and whether the public will even embrace the initiative.
In a recent interview with Irish radio, Christine Lagarde reiterated that while foreign platforms operate under European regulations, transaction data is still leaving the EU. That is why Europe needs its own solution, just in case it can’t rely on someone else’s infrastructure in the future.
