Lagarde warns Europe risks losing payments sovereignty

ECB’s Lagarde Warns Europe Risks Losing Payments Sovereignty

European Central Bank President Christine Lagarde warned Monday that Europe faces an urgent threat to its payments independence from US stablecoins and foreign-owned financial infrastructure, calling on the continent to build its own digital foundations rather than replicate instruments developed elsewhere.

Speaking at an ECB conference on “Money in Transition: Digitalisation and Innovation in Payments,” Lagarde said technology and geopolitics were creating new challenges for Europe’s monetary system, and that the digital euro would help reduce the region’s reliance on foreign payments networks.econostream-media

The Stablecoin Challenge

The warning builds on a sustained campaign by Lagarde against what she views as the creeping “dollarisation” of digital payments. In a speech in Spain last month, she laid out her most detailed case yet, noting that stablecoins have grown from less than $10 billion six years ago to more than $300 billion today, with nearly 98% denominated in US dollars and controlled largely by two issuers — Tether and Circle.europa

Lagarde argued that the US GENIUS Act, signed into law in July 2025, is explicitly designed to “ensure the continued global dominance of the U.S. dollar” through stablecoin expansion. She said the trade-offs of promoting euro-denominated stablecoins as a response “outweigh the short-term benefits,” warning they could weaken bank lending and monetary policy transmission.reuters

Instead, Lagarde has advocated for placing central bank money at the heart of new digital infrastructure through the Eurosystem’s Pontes wholesale settlement project, launching in September, and its Appia roadmap targeting a fully interoperable tokenised financial ecosystem by 2028.europa

A Continental Push for Payment Independence

Lagarde’s remarks align with a broader European mobilization. French President Emmanuel Macron told a payments summit in March that “we must build a sovereign payment model,” warning that “giving up control over payments would mean accepting that the core of our transactions depends on actors who are not necessarily aligned with us”.trtworld

On the private sector front, ACI Worldwide announced June 15 that it has joined the European Payments Initiative as a principal member, integrating EPI’s Wero digital wallet onto its payments platform. Wero, which runs on SEPA instant payment rails and currently serves 55 million users across Belgium, France, and Germany, aims to offer a unified European alternative to card networks dominated by US firms.aciworldwide

The Race Against Network Effects

The urgency reflects a structural reality: dollar-denominated stablecoins have already become the default settlement asset in tokenised finance through first-mover advantage. An IMF working paper found that US legislation supporting stablecoins reduced the market value of incumbent payment firms by approximately $300 billion, suggesting markets expect stablecoins to reshape the payments landscape.imf

EPI CEO Martina Weimert said the ACI Worldwide partnership would help accelerate “a more connected, innovative and resilient European payments ecosystem,” with expansion to Luxembourg and the Netherlands planned in coming months.aciworldwide