Bundesbank President Joachim Nagel has said Europe must accelerate work on a digital euro to safeguard monetary sovereignty in an increasingly fragmented global economy. Speaking at the “Frankfurter Impulse” event hosted by FPS Law on November 24 in Frankfurt, Nagel warned that geopolitical tensions, the rise of US-based payment firms, and the rapid expansion of dollar-denominated stablecoins are reshaping global finance.
Nagel said the euro area must avoid being “crushed” between the strategic interests of the United States and China. He noted that protectionist measures, shifting geopolitical alliances, and exchange-rate volatility were adding uncertainty for businesses across Europe. Against this backdrop, he argued that Europe needs stronger competitiveness, deeper integration and more autonomy in critical infrastructure, including payments.
Digital euro as cornerstone of European payments independence
A significant section of the speech focused on digital money. Nagel reiterated that a European central bank digital currency, available to all citizens and accepted across the euro area, would help address persistent fragmentation in payments. He emphasised that a digital euro would be built on European infrastructure, reducing reliance on foreign providers such as Visa, Mastercard and PayPal.
According to Nagel, the legal framework currently under negotiation in Brussels will determine whether the Eurosystem can introduce the digital euro by 2029. He said that if the legislation enters into force in 2026, “the Eurosystem should be able to introduce the digital euro in 2029”, echoing earlier statements from the ECB and the European Commission.
Nagel also linked the initiative to growing concerns over the dominance of US dollar-denominated stablecoins. These private tokens, he said, risk undermining Europe’s influence over its own monetary and payments environment. He noted that US regulation aims to cement the dollar’s global reach via stablecoins, increasing the pressure on Europe to respond.
“Europe’s sovereignty in payments would be at risk if stablecoins issued by US companies were used extensively here,” he warned. While a digital euro alone would not eliminate this risk, Nagel said it would strengthen the attractiveness of the euro. He also highlighted the need for more euro-pegged stablecoins issued by European firms, an area where supply remains limited.
Structural reforms and central bank independence
Nagel placed the digital euro within a broader agenda for European renewal. He called for progress on the savings and investment union, deeper capital market integration, and further development of the single market. Reports by Mario Draghi and Enrico Letta, he noted, already provide a roadmap but implementation remains slow.
He also warned that central bank independence is facing pressure globally, pointing to recent developments around the US Federal Reserve. Independence, he said, remains essential for maintaining trust and ensuring price stability. At the same time, policymakers must assess long-term risks, including those linked to climate change and the aftereffects of the recent inflation surge.
The Bundesbank chief closed with a call for Europe to “hold its own in a changed world” by strengthening competitiveness, promoting sovereignty, and moving decisively on reforms. “Stumbling from time to time is certainly preferable to not making any progress at all,” he said.