How the EU’s Digital Euro Plan Could Hand Power to the US

Fourteen of Europe’s leading banks are pushing back against the European Central Bank’s (ECB) plan for a digital euro. They argue that the project could weaken private payment systems, especially ahead of critical parliamentary discussions in Brussels this week. Lawmakers are also expressing concerns, calling for the initiative to be scaled back as it appears to lack clear benefits and may duplicate market-driven innovations.

The ECB aims to roll out a digital euro by 2029 but faces escalating resistance from major European banks. Fourteen prominent lenders, including Deutsche Bank, BNP Paribas, and ING, have unified against the proposal. They argue that the digital euro would duplicate existing private-sector efforts to establish a unified European payments network.

An example of such private-sector innovation is Wero, which is operational in Belgium, France, and Germany, and is planning to expand across the eurozone. Wero was created to reduce dependence on non-European providers such as Visa, Mastercard, and PayPal. The banks backing Wero claim that the ECB’s retail digital currency could disrupt—not complement—this progress.

Despite opposition, the ECB plans to pilot the digital euro in 2027, though its full implementation requires authorization from the European Parliament and national governments. Lawmakers are now debating whether the digital euro—especially its online form—would compete with private payment systems rather than complement them.

In today’s European Parliament meeting, several stakeholders advocate for a scaled-down, offline-only version of the digital euro, which would function as a digital form of cash. This model would enable payments without internet access and avoid redundant overlap with already well-established commercial networks across Europe.

Parallel to the digital euro debate, Europe’s Markets in Crypto-Assets (MiCA) framework, designed to regulate and protect cryptocurrency markets, may be unintentionally benefiting US-based issuers.

MiCA requires EU-based stablecoin issuers to redeem their tokens at par value without fees, even during market volatility. In contrast, US rules allow stablecoin issuers to set redemption fees and implement reserve policies prioritizing domestic holders. This discrepancy creates a structural imbalance, giving US financial institutions a competitive edge.

EU regulatory approaches could lead to increased redemption pressure on European stablecoin issuers during periods of financial instability. Analysts warn that EU issuers may become vulnerable to global investors seeking redemptions, while US firms remain insulated. The European Systemic Risk Board has flagged the risks of multi-issuer frameworks, which could funnel redemptions into the EU, amplifying systemic vulnerabilities.

Dollar-based stablecoins are expanding rapidly, cementing the dollar’s dominance in global digital finance. Instead of diminishing reliance on foreign monetary systems, the EU framework may inadvertently deepen Europe’s dependency on US-led financial infrastructure. This trend underscores broader weaknesses in Europe’s financial autonomy strategy, as both the digital euro and crypto regulatory efforts risk slowing innovation while increasing reliance on external systems.