Philip Lane: Digital Euro Urged to Counter U.S. Tech and Dollar Stablecoins

Key Takeaways

• ECB Chief Economist Philip Lane is calling for a digital euro to reduce Europe’s reliance on U.S.-based payment systems like Apple Pay, Google Pay, and PayPal.

• About 65% of card payments in the eurozone are processed by U.S. firms, which Lane says exposes the EU to economic pressure and potential coercion.

• The dominance of dollar-pegged stablecoins is a growing concern, with 99% of the stablecoin market tied to the U.S. dollar—threatening the euro’s role in Europe’s financial system.

• A digital euro would be a European-controlled alternative that ensures monetary sovereignty and supports secure, widely accepted digital payments.

Currently, about two-thirds of card payments within the euro area are processed by U.S. giants like Visa and Mastercard. On top of that, digital payment platforms such as Apple Pay, Google Pay, and PayPal are becoming the go-to solutions for European consumers. Lane stressed that this heavy dependence on foreign firms exposes the EU to significant vulnerabilities, including the potential for economic coercion. If these services were ever restricted or politicized, it could disrupt millions of daily transactions and affect financial stability across member states.

This reliance is not just a technical or convenience issue—it’s a strategic concern. Lane warned that Europe’s payment infrastructure, if left in the hands of entities based outside its borders, could be used as a lever in times of geopolitical tension. The lack of European-controlled digital payment rails effectively means that the continent’s financial ecosystem is increasingly subject to decisions made in Washington or Silicon Valley.

Another major threat comes from the rise of stablecoins—digital assets designed to maintain a stable value by being pegged to fiat currencies, most commonly the U.S. dollar. Lane highlighted that 99% of the current stablecoin market is linked to the dollar. While stablecoins offer efficient and fast transactions, their dominance could lead to a gradual dollarization of the European digital economy. If consumers and businesses begin to favor dollar-linked assets for everyday payments, it could erode the euro’s relevance as a medium of exchange and store of value.

To counter these trends, Lane reiterated the ECB’s commitment to launching a digital euro. Unlike private stablecoins or foreign payment systems, a digital euro would be issued and regulated by the ECB, ensuring monetary policy remains firmly in European hands. It would also provide a secure and accessible digital payment option for all citizens, whether online, in-store, or peer-to-peer, without relying on foreign intermediaries.

The ECB has been conducting research and development for the digital euro since 2021 and entered a preparation phase in 2023. However, progress has been slowed by the need for EU-wide legislation, and political consensus remains a challenge. A final decision on whether to move forward with the full-scale implementation of the digital euro is expected by the end of 2025. In the meantime, the ECB continues to engage with stakeholders and refine its design and privacy features to ensure the digital euro meets the expectations of both policymakers and the public.

Globally, the landscape is evolving rapidly. Several countries have already launched their own central bank digital currencies (CBDCs), including Nigeria’s eNaira, Jamaica’s JAM-DEX, and the Bahamas’ Sand Dollar. Major economies like China, Russia, and India are running large-scale pilot programs, while the U.S. is increasingly promoting dollar-backed stablecoins to extend its monetary influence abroad.

Lane emphasized that Europe cannot afford to fall behind in this digital arms race. As the U.S. pushes forward with its stablecoin agenda and other nations develop sovereign digital currencies, the eurozone risks becoming a passive observer in a space that will shape the future of global finance. A failure to act now could leave Europe more dependent, less competitive, and vulnerable to financial and geopolitical shocks.

The message is clear: a digital euro is not just about innovation—it's about preserving Europe's financial autonomy in an age where digital dominance translates directly into economic power. Lane’s comments underscore the urgency for the EU to take decisive action, implement supportive legislation, and ensure the euro remains a pillar of strength in the global financial system.