Europe handles digital money as it strives to counter U.S. and China's technology dominance

February 17, 2023: -The European Central Bank works on a digital currency as the region protects itself from issues with China and the U.S.

The central bank started searching for the feasibility of a digital euro in October 2021. With this decrease, the heads of state across the E.U. will have to decide if the ECB should push ahead with the following steps, which include testing the necessary technical deals so Europeans can spend digital euros.

“The ECB is worried that the eurozone will end up in a geopolitical and the sandwich position in the economy amid the big tech firm of the USA and China’s payment systems without a digital euro. Currently, Europe lacks digital areas,” Guido Zimmermann, senior economist at German bank LBBW, told on Wednesday.

In November, ECB President Christine Lagarde acknowledged that point during a speech. “The entry of big technologies into payments could surge the risk of market ruling and dependence on foreign payment technologies, with the trials for Europe’s strategic autonomy,” she stated.

“Currently, more than two-thirds of European card payment transactions are run by firms with headquarters outside the European Union,” she further said.

Mastercard, PayPal, Alipay and UnionPay create the top global payment companies. The initial three are American, and the last two are Chinese. None of them is European.

Zimmermann said that politicians in Europe want consumers or firms in the region to remain independent of U.S. Big Tech companies for payments.

He added that European officials are trying to avoid a situation in which China is becoming the sole determinant of the costs of the “Digital Silk Road”, a landmark Chinese project to invest in digitalization worldwide.

“The aim, I think it is a fixation for a few, of ensuring the sovereignty or power of the E.U., is the main person who drives for the digital euro in Brussels, and in Frankfurt,” Daniel Gros, a differentiated fellow at the think tank CEPS stated.