The European Central Bank (ECB) is ramping up its efforts to push for a digital euro, warning that inaction could leave the eurozone dangerously exposed to foreign-controlled payment systems and US dollar-backed stablecoins.

Speaking before the European Parliament’s Committee on Economic and Monetary Affairs on Tuesday, ECB Executive Board Member Piero Cipollone delivered a strong message: the time has come for Europe to act decisively to secure its strategic autonomy in the digital payments landscape.

“In a world of growing geopolitical uncertainty, relying on the kindness of strangers for essential services like payments is not a sustainable strategy,” Cipollone said. “Europe needs a sovereign digital payment solution.”

As consumer preferences increasingly shift toward digital payments — particularly for online shopping — Cipollone warned that European dependence on international card networks and non-EU digital wallets like PayPal and Apple Pay poses serious risks. Thirteen euro area countries already rely exclusively on international schemes for in-store payments, while many others depend on them for cross-border transactions.

Cipollone emphasized that the rise of foreign stablecoins, especially those backed by the US dollar, could accelerate the erosion of the euro’s role in global finance. He noted recent policy moves by the U.S. administration promoting crypto-assets and stablecoins, which could lure euro deposits abroad and further entrench the dollar’s dominance in cross-border transactions.

“This is not just about payments,” he said. “It’s about the future of our monetary sovereignty and financial stability.”

To counter these risks, the ECB envisions the digital euro as a secure, EU-governed alternative that would complement cash, offer privacy-protected digital payments, and be free for basic use. It would be available both online and offline, ensuring functionality even during power outages or cyberattacks.

Cipollone was clear that the ECB does not intend to replace cash. Instead, the digital euro would coexist with banknotes and coins — which remain essential for financial inclusion and resilience — while extending the benefits of sovereign money into the digital space.

The ECB also highlighted the economic costs of a fragmented European payments market. Domestic card schemes are losing market share, while international operators continue to impose high fees on European banks and merchants. A unified approach through the digital euro, Cipollone argued, would reduce these costs, boost competition, and empower European payment providers to scale across the single market.

Progress on the technical and legislative fronts appears to be on track. The ECB is finalizing a digital euro “rulebook” in collaboration with market participants. It is also working on setting appropriate holding limits to prevent disruptions to the banking sector, and exploring innovative use cases such as conditional payments through public-private partnerships.

“We are nearing the end of the preparation phase,” Cipollone told lawmakers, adding that the digital euro could help foster innovation while preserving the stability of the euro area’s financial system.