CBDC Aims to Ensure EU’s Strategic Autonomy in Payments

The European Central Bank (ECB) believes that the digital euro (CBDC) is essential to securing the European Union’s strategic autonomy amid geopolitical instability and growing dependence on foreign payment systems.

Piero Cipollone, Member of the ECB’s Executive Board, stated during a meeting of the European Parliament’s Committee on Economic and Monetary Affairs that launching the digital euro is a critical step toward reducing the EU’s reliance on international payment providers. He emphasized that 13 eurozone countries are fully dependent on foreign solutions for retail payments, posing a threat to both financial stability and the region’s monetary sovereignty.

According to Cipollone, while the payments sector is becoming increasingly digital, cash still plays a vital role in promoting financial inclusion and stability. However, cash can’t be used for online payments, which now account for over one-third of all retail transactions in the EU. This creates a critical dependency on foreign platforms such as PayPal and Apple Pay, as well as international card networks that charge high fees to European banks and merchants.

The ECB is also concerned that the growing use of U.S. dollar-pegged stablecoins could lead to an outflow of euro deposits from the EU and further strengthen the role of the dollar in cross-border payments. Such private initiatives, the ECB warns, pose a threat to Europe’s monetary sovereignty.

As highlighted in the ECB’s statement, the digital euro will be free for basic use, ensure user privacy, and support both online and offline transactions. It will serve as the foundation for a unified European payment standard, enabling private providers to scale their services across the EU. The central bank digital currency isn’t being developed as an alternative to private solutions but rather as a platform that supports their growth.

As part of the project, a unified rulebook was already prepared, and it’ll become available to market participants after the relevant legislation is passed. The ECB is also working on defining holding limits for the digital euro to ensure financial system stability, with recommendations expected to be published in summer 2025.

Since October 2024, the ECB received around 100 applications to participate in pilot projects using the digital euro, including experiments with conditional payments. At the same time, research is underway on user preferences, privacy measures, offline functionality, and system resilience.

Cipollone warned that delays in implementing the digital euro could result in a loss of control over the EU’s financial infrastructure. He urged policymakers to expedite the adoption of legal acts granting the digital euro the status of legal tender.

A few weeks earlier, another ECB Executive Board member, Philip R. Lane, also called the digital euro a key element in preserving the eurozone’s monetary sovereignty amid the digitalization of the economy. However, according to the ECB’s own data, most Europeans don’t support the idea of introducing a European CBDC.