Europe considers a digital currency as it strives to counter U.S. and China's tech dominance

The European Central Bank is moving connected a integer currency arsenic the portion seeks to support itself from tensions with China and the United States.

The cardinal slope started investigating the feasibility of a integer euro backmost successful October 2021. This fall, the heads of authorities crossed the EU volition person to determine if the ECB should propulsion up with the adjacent steps, which see investigating the indispensable method arrangements truthful Europeans tin walk integer euros.

"The ECB is disquieted that the euro portion volition extremity up successful a geopolitical and economical sandwich presumption betwixt the large tech companies of the USA and the outgo systems of China without a integer euro. Right now, Europe lacks integer platforms," Guido Zimmermann, elder economist astatine German slope LBBW, told CNBC Wednesday.

ECB President Christine Lagarde acknowledged that constituent during a code successful November. "The introduction of large techs into payments could summation the hazard of marketplace domination and dependence connected overseas outgo technologies, with consequences for Europe's strategical autonomy," she said.

"Already present much than 2 thirds of European paper outgo transactions are tally by companies with office extracurricular the European Union," she added.

Mastercard, Visa, PayPal, Alipay and UnionPay marque up the apical planetary companies for payments. None of them are European. The archetypal 3 are American and the past 2 are Chinese.

Politicians successful Europe bash not privation consumers oregon firms successful the portion to go babelike connected U.S. Big Tech companies for payments, Zimmermann said.

He added that European officials are besides trying to debar a concern successful which China becomes the sole determinant of payments connected the "Digital Silk Road" — a landmark Chinese task to put successful digitalization crossed the world.

"The goal, I deliberation it is simply a fixation for some, of ensuring the sovereignty oregon powerfulness of the EU, is the main operator for the integer euro successful Brussels, and successful Frankfurt," Daniel Gros, distinguished chap astatine the deliberation vessel CEPS, told CNBC via email.

European officials person for respective years been debating the request to beryllium much autonomous and little reliant connected different parts of the world, but talks intensified successful the aftermath of the Covid-19 pandemic and past again aft Russia's penetration of Ukraine.

"The relevance of preserving geopolitical sovereignty has accrued successful caller ECB speeches and publications for a integer euro. This surely has to bash with the outbreak of the Ukraine warfare and the expanding planetary geopolitical tensions," Zimmerman said.

Lagarde said successful November that a integer euro "is a communal European project" and "would fundamentally service wider nationalist argumentation objectives, specified arsenic strengthening Europe's strategical autonomy."

Euro versus U.S. Dollar

Recent discussions astir Europe's autonomy person progressive earthy world and magnet worth chains, which are seen arsenic captious successful the modulation to a carbon-neutral society. They person besides progressive vigor supplies, aesculapian instrumentality and electrical cars.

"The conception [strategic autonomy] has its roots successful the EU's defence and information sector. However, it has go progressively salient successful caller years arsenic a effect of the changing geopolitical discourse characterized by the expanding contention betwixt the U.S. and China," Antonio Barroso, managing manager astatine Teneo, told CNBC.

But there's much down the program for a integer euro.

Zsolt Darvas, elder chap astatine the Brussels-based deliberation vessel Bruegel, attributed ECB enactment successful this country partially to the "growing request for crypto assets" and the information that galore different cardinal banks are besides considering the improvement of a integer currency.

"The ECB mightiness not privation to beryllium a laggard successful presumption of adopting caller technologies," helium said.