Payments, sovereignty, and critical infrastructure: The strategic case for the digital euro

After years of investigation, the digital euro project has entered the legislative stage. Geoeconomic developments, especially the full-scale invasion of Ukraine in 2022 and the following regime of sanctions against Russia, as well as the economist-nationalist policies of the second Trump administration, have reinforced arguments for EU monetary and infrastructure sovereignty. At the same time, however, the digital euro project is under pressure from private solutions, stablecoins and the European Wero initiative that claim to provide similar benefits as the digital euro. While these may develop into useful tools for payments, they fail to provide the same features, such as universal acceptance and legal certainty, competitive neutrality, and - crucially - EU sovereign control over settlement infrastructure. This Policy Letter calls upon EU policymakers to reject the false dichotomy between private solutions and a public infrastructure and to make swift progress on the legislation and implementation of the digital euro.