Europe is intensifying efforts to reclaim payment sovereignty, driven by geopolitical fragmentation and reliance on foreign financial systems. The European Central Bank (ECB) is pursuing a dual strategy: a public initiative, the digital euro, and private account-to-account payment networks like Wero, backed by major European banks.
The digital euro, envisioned as direct central bank digital cash, aims to be stable, independent of US processing, and legal tender. A pilot program is slated for the second half of 2027, pending EU legislation.
However, legislative progress is stalled. The European Parliament has yet to adopt a negotiating position on the digital euro regulation, with key amendments blocked by the Committee on Economic and Monetary Affairs. This delay jeopardizes the issuance of the digital euro.
Experts caution against conflating different layers of the payment ecosystem. While reliance on foreign schemes for international transactions is acknowledged, domestic processing and digital wallets like Apple Pay and Google Pay are not seen as existential threats to sovereignty.
Meanwhile, the private sector is advancing. Wero, a pan-European wallet, is operational and expanding across Europe, aiming to rebalance transactions and offer alternatives to dominant international schemes. Collaboration between public and private initiatives is seen as crucial for success.
Challenges remain for any European payment alternative, including cost-effectiveness for merchants, seamless consumer experience, fraud management, and dispute resolution. The digital euro itself faces limitations in international functionality and potential risks to bank deposits if poorly designed.
An emerging vision proposes a layered ecosystem: Wero for domestic and European transactions, Visa and Mastercard for international payments, and the digital euro as a public backstop from the ECB.