Europe wants digital sovereignty, including in payments — but it is standing in its own way. The digital euro, as currently planned by the ECB, jeopardizes exactly what it is supposed to protect: Independence, competitiveness and trust. Here are three reasons why it is doomed to fail:
1. Sovereignty given away: The digital euro as a door opener for Big Tech
Europe needs independence from US payment giants but the digital euro, in the form planned by the ECB and Bundesbank, opens the door wide open for them. It gives them easy access to European customers, their data and the payment infrastructure. This is the opposite of the goal of European sovereignty:
Customer data will remain discoverable by non-European providers.
Merchants will not be freed from their dependence on international payment service providers and Big Tech.
Europe will not gain the necessary control over its payment flows.
Imagine this image: When German Chancellor Friedrich Merz invites French President Emmanuel Macron to coffee in Paris and makes a cashless payment, Donald Trump is symbolically sitting at the table with them — because US payment groups dominate intra-European payment transactions. The digital euro in its current form will do nothing to change this.
2. Competition needs a market, not administration
The payment segment is characterized by high-performance competition, not an administrative process. The winners here are those who combine customer experience, innovation and market access. The ECB, however, is not a market participant and has no customer experience itself. It is a referee, and it should not want to play the game itself.
Instead of supporting the pooling of European providers’ strengths, the ECB will occupy all the development capacities of European payment providers for years to come with a project worth billions. This will prevent them from creating real market solutions and will weaken Europe in a fiercely competitive environment. It is like putting another sack of cement on the shoulders of European athletes in the global payment marathon.
Europe needs cooperation between its providers that have experience in the market, no administrative competition from Frankfurt and no new competitive burdens. The European financial sector’s joint answer to digital payments is called “Wero.” This is the better alternative.
3. Trust is Europe’s strongest currency
Money only works if people have confidence in it. This trust is fostered through reliability, stability and proximity — not through abstract bits and bytes. With its digital euro, the ECB would withdraw bank deposits from the cash cycle, thereby weakening lending and destabilizing the financial system. Yet, the euro has long been available in a digital form in every European credit institution and every bank account.
For customers, their bank account is the front door to payment transactions. A digital euro without a connection to familiar customer accounts would take digital money away from its home. Circumventing this would jeopardize the acceptance and trust of customers.
Conclusion: Europe needs real strength, not symbolism.
The digital euro is intended to make Europe more independent. In its currently planned form, however, it is an expensive and useless prestige project for normal people. Instead of strengthening the market, it will create new dependencies; instead of promoting trust, it will sow doubt.
This is not the right way.
Digital sovereignty can only be achieved through strong, competitive European providers. Europe will only be successful in the payment segment if it combines market forces and offers real benefits for customers. That is why a digital euro:
must strengthen European payment transactions in international competition,
must prove itself in the market and be supported by market participants,
can only be integrated into people’s real lives through their bank accounts.
Ulrich Reuter has been President of the German Savings Banks and Giro Association (DSGV) since January 2024.