It is not wise to outsource our sovereignty, said Bundesbank President Joachim Nagel in a speech at the House of the Euro in Brussels. He gave this speech at an event on the digital euro and its importance for Europe’s strategic autonomy. Mr Nagel stressed the need to make Europe’s payment infrastructure more independent and more resilient. 

Cash payments in decline

According to Mr Nagel, the digitalisation of the economy has fundamentally changed the way in which we interact with money. In 2024, cash accounted for only 24% of daily payments in the euro area by total value, and the share of retailers that do not accept cash has tripled to 12% over the past three years, he explained. In light of this development, it is important to provide the general public with access to central bank money in digital form.

The digital euro as a complement to cash

In his speech, Mr Nagel made it clear that the digital euro was not intended to replace cash, but to serve as an addition. It is not about abolishing cash, but complementing it, he clarified. The digital euro could also help in overcoming the strong fragmentation of the European payments market. Despite the introduction of the euro 25 years ago, the cashless payments market in the retail sector in Europe remains fragmented along national borders, Mr Nagel said.

With a common infrastructure and a Europe-wide acceptance network, the digital euro could serve as a catalyst for innovation and efficiency. The digital euro is intended to be a basic public utility, while private sector providers could build on this infrastructure and develop innovative services.

Sovereignty only through strategic autonomy

According to Mr Nagel, a key argument for the digital euro is to safeguard European sovereignty in payments. Without sovereignty in this area, true strategic autonomy is hardly conceivable, he said. At present, a considerable share of digital payments in Europe are settled using non-European infrastructure. Around two-thirds of all card payments in Europe are processed by the major US payment providers. This is a very high degree of dependency in a systemically important area like payments, Mr Nagel explained.

The digital euro could reduce these dependencies and strengthen Europe’s ability to act. As a purely European alternative for digital payments, the digital euro would reduce dependencies and strengthen Europe’s ability to act, he said. 

Political project for greater sovereignty

Mr Nagel was optimistic that the digital euro would be introduced soon. It is encouraging that the digital euro has gone far beyond a technical concept – it is now a political project for greater sovereignty, and tangible progress is being made, he said. He stressed the importance of a legal framework to establish the digital euro as legal tender. I am firmly convinced that the legislative process can be concluded by the end of the year, said Mr Nagel. First issuance of the digital euro would be conceivable from 2029 onwards.

Panel discussion on strategic autonomy

Mr Nagel then discussed the topic of The Digital Euro: Anchoring Europe’s Strategic Autonomy in a Digital Future with José Antonio Álvarez, Vice Chair of Santander, Isabelle Buscke, Secretary General of Finance Watch, Stelios A. Georgakis, Central Bank of Cyprus, and Michael Hager, Head of Cabinet of EU Commissioner Valdis Dombrovskis. The discussion focused on how the digital euro could strengthen Europe’s strategic autonomy in an increasingly digitalised and geopolitically fragmented world.