Europe Strives for Financial Independence with Digital Euro

Europe's dependence on American payment providers like Visa and Mastercard poses economic risks, says ECB chief economist Philip Lane. The ECB is pushing for a digital euro to secure financial autonomy. However, slow legislative progress delays the initiative, crucial for reducing geopolitical influence in the euro zone.

Europe is increasingly concerned about its heavy reliance on American payment providers, which leaves the continent vulnerable to economic coercion, warned European Central Bank chief economist Philip Lane. In a speech on Thursday, Lane highlighted the deteriorating relationship between Europe and the U.S. as a major concern.

Currently, Visa and Mastercard handle around two-thirds of card payments in the euro zone, and tech firms like Apple Pay, Google Pay, and PayPal account for significant retail transactions. This reliance, Lane argued, undermines Europe's strategic autonomy and exposes it to economic pressure.

To counter these risks, the ECB is advocating for a digital euro—an initiative that would enable direct payments without intermediaries. However, legislative hurdles remain, with the ECB targeting a 2025 decision for the next phase of this crucial project.

(With inputs from agencies.)