Europe Must Adopt Digital Euro to Counter Stablecoin Threats and US Payment Dominance, Says ECB Chief Economist

European Central Bank (ECB) Chief Economist Philip Lane has reiterated the need for a digital euro to ensure Europe’s monetary sovereignty in an increasingly fragmented geopolitical landscape. Lane shared this perspective in a keynote speech at the University College Cork Economics Society Conference in Ireland. He highlighted the growing risks of foreign-controlled payment systems and stablecoins, warning that they could undermine the euro’s role in domestic and cross-border transactions. Lane argued that the digital euro is essential for Europe's financial autonomy in an increasingly fragmented geopolitical environment. “A digital euro is not just about making sure our monetary system adapts to the digital age,” Lane stated. “It is about ensuring that Europe controls its monetary and financial destiny against increasing geopolitical fragmentation.” Notably, the European Commission has proposed draft legislation for the digital euro. It is under review by the European Council and the European Parliament.  Meanwhile, Lane warned that delays in launching a central bank digital currency (CBDC) could expose Europe to risks as foreign stablecoins and non-European payment firms expand their influence. Reliance on US Payment Firms One of the key issues Lane addressed was Europe’s dependence on US-based payment giants. These include Visa, Mastercard, Apple Pay, Google Pay, and PayPal.  According to ECB data, these firms process 65% of euro area card payments. Some EU countries have even entirely replaced national payment schemes with international alternatives. This reliance gives foreign firms control over critical financial infrastructure. In addition, it increases Europe’s vulnerability to economic pressure and potential service disruptions.  Lane emphasized that Europe “effectively outsources its payment infrastructure” by depending on international cards, apps, and stablecoins. This makes the region susceptible to policy changes and regulatory actions from outside jurisdictions. Stablecoins and Geopolitical Tensions Drive Need for Digital Euro The rapid growth of stablecoins, where the US Dollar backs 99%, poses another challenge to Europe’s financial independence. Concerns are mounting that these digital assets could erode the euro’s influence in daily transactions and financial markets. Additionally, Lane pointed to global trends such as China’s digital yuan, the BRICS nations’ CBDC initiatives, and projects like mBridge as signs that other major economies are strengthening their monetary sovereignty. He argued that Europe risks falling behind in the transition toward digital finance without a digital euro. Ensuring Europe’s Financial Future with a Digital Euro The ECB believes introducing a digital euro would provide a secure, universally accepted payment solution under European governance, reducing the region’s dependence on foreign payment providers.  Lane emphasized that a CBDC would help prevent foreign-currency stablecoins from gaining a significant foothold in Europe’s financial system. This would mitigate risks to banking stability and credit markets.