The European Central Bank (ECB) scored a parliamentary breakthrough on Tuesday. The European Parliament’s economic affairs (ECON) committee endorsed its long-gestating plan for a digital euro, and in doing so paved the way for a central-bank-backed electronic payment instrument meant to loosen the eurozone’s grip on US credit card networks. The vote doesn’t amount to a final adoption: ECON has merely set Parliament’s negotiating position. Another vote will be needed and Council negotiations still lie ahead.

In essence, the digital euro would be an electronic wallet distributed by banks or fintechs but guaranteed directly by the ECB. This would let eurozone residents pay online and in person without routing through a US intermediary. The money wouldn’t come from a commercial bank deposit or funds held in a private fintech app, but would be a direct liability of the ECB.

Six years in the making, the project has become a priority since Donald Trump’s return to the White House. His administration has slapped tariffs on the EU and other allies, and Washington’s readiness to weaponize its grip on Visa and Mastercard payments is no longer a distant possibility.

The Trump administration has recently broadened its hostility to Europe and shown nothing is off the cards. The risk was recently highlighted by American sanctions being placed on European officials it didn’t like — among them UN Special Rapporteur on the Palestinian territories Francesca Albanese and several International Criminal Court (ICC) judges. As a result, those individuals can no longer open a bank account anywhere in Europe, since any bank dealing with them risks being sanctioned itself.

As Slovenian judge Beti Hohler put it, being sanctioned cut her off from her Apple ID, iCloud, Amazon, Airbnb and PayPal “overnight, without advance warning”. French judge Nicolas Guillou, also sanctioned, described himself as “effectively blacklisted by much of the world’s banking system”. Washington, in other words, can erase a European citizen’s financial existence and governments are powerless to stop it. That’s the problem the digital euro is meant to solve. But does this plan actually have any prospect of achieving that purpose?

The idea is simple enough: money would be issued directly by the ECB rather than by a commercial bank, so citizens effectively hold an account with the central bank itself. Today, the bulk of European card and digital payments flow through Visa, Mastercard and US platforms like Apple Pay and PayPal; a genuinely sovereign digital euro would let Europe run its own payment rails, immune to a US company’s — or the US government’s — say-so.

There is the possibility that a digital euro risks becoming a vehicle for centralizing financial surveillance at the ECB level, eroding both privacy and national banking sovereignty. On paper, the current draft answers this: privacy-by-design principles, zero-knowledge proofs to verify transactions without exposing personal data and no ECB access to identifying information.

However, German MEP Fabio De Masi, who voted against the bill, points out that the digital euro is slated for integration into the EU’s digital identity (EUDI) wallet — meaning payment data and identity verification will eventually merge. The one genuine privilege of physical companies is the ability to transact below the radar, but this would survive in neither the digital euro’s online nor its offline form. Even worse: large factions in Parliament want the digital euro wired directly into the enforcement of EU sanctions against EU citizens themselves, which is worrying for civil freedom.

So, it’s clear Europeans need to extricate themselves from American financial tutelage. But the answer can’t be to hand more power to the very Brussels institutions that have spent decades hollowing out the sovereignty of European nation-states, often at Washington’s own request.

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Thomas Fazi is an UnHerd columnist and translator. His latest book is The Covid Consensus, co-authored with Toby Green.

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