Eurozone digital money strategy advances across payments and tokenised finance

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Eurozone digital money advances

Highlights

ECB launched Project Pontes last month, enabling central bank reserves as cash settlement for tokenised securities, advancing the Appia roadmap for Eurozone digital finance.
EU governments aim to finalise digital euro legislation by year-end, deepening European control over payment systems versus U.S. infrastructure dependence and CBDC prohibition.
Debate intensifies over extending central bank reserve access to non-banks, challenging the current two-tier liquidity model and fueling calls for broader public digital money access.

ECB projects and EU policy agenda

As reported by Financial Times, the European Central Bank last month launched Project Pontes, which makes central bank reserves available as a cash settlement asset for tokenised securities trading. The initiative is described as an early step in the ECB’s broader Appia roadmap for tokenised finance, while EU governments are also expected to finalise legislation for the digital euro by the end of the year.

A recent paper by Agnès Bénassy-Quéré, deputy governor of France’s central bank, argues that the Eurozone is assembling a broader policy framework that combines a retail central bank digital currency, wholesale infrastructure for tokenised finance and stronger links between European payment systems and those of other economies. Together, those elements suggest a more deliberate public monetary architecture for the digital age.

The strategy is taking shape as Europe seeks greater control over core payment and settlement systems. The article contrasts that trajectory with the U.S., where work on a CBDC has been prohibited, and argues that the Eurozone is moving into a leading position in public digital money despite Europe’s broader reputation for slow public-sector innovation.

Sovereignty and market implications for Europe

The push carries a strong geopolitical and commercial logic. European policymakers have long worried that dependence on U.S.-centred financial infrastructure weakens the bloc’s ability to pursue independent policy, particularly after earlier disputes over Iran policy and later sanctions-related pressure affecting institutions and officials based in the Eurozone.

There is also an economic rationale. Card payments in most Eurozone countries rely heavily on U.S. providers, while many online wallets are also based in the U.S., leaving part of Europe’s payment activity and fee income in foreign-controlled channels. For the public sector, control over money issuance also affects monetary conditions and seigniorage income.

The article says wider international use of the euro remains another major objective, though digital infrastructure alone is unlikely to deliver that outcome. It cites a European Macro Policy Network report arguing that deeper shifts, especially more common EU debt issuance, are needed to make the euro more attractive globally as a trading, settlement and reserve currency.

The debate is also turning to market structure. Lucrezia Reichlin argues that access to central bank money should depend on economic function rather than bank status, calling for broader access to reserves for non-bank financial companies and a less bank-centred liquidity framework. That view challenges the current two-tier model, under which banks retain privileged access to central bank money and non-banks face tighter constraints, including in stablecoin regulation.

The article raises the possibility that even a more balanced two-tier system may fall short if privileged intermediaries remain vulnerable to U.S. sanctions pressure. It says arguments from campaign group Positive Money point toward broader direct public access to central bank money, a shift that could eventually blur or remove the line between wholesale and retail digital central bank money.

In our earlier article on Mario Draghi’s warning about today’s policy trade-offs, we outlined how keeping interest rates above growth for too long can worsen debt dynamics and raise the risk of fiscal dominance, even as central banks focus on inflation control. We also highlighted his argument that rate paths should be no tighter than necessary and paired with EU-level measures—such as deeper market integration and targeted industrial policy—to protect long-term investment, productivity, and resilience.

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