Unfiltered: The payments sovereignty decoy

In his June column for The Paypers, Dwayne Gefferie, Payments Strategist, compares Europe’s digital euro advancements to the US’s decision to halt digital dollar developments in favour of stablecoins. Who is winning at the payments sovereignty race? 

Two votes happened 24 hours apart this week, and together, they tell you who actually controls money in the digital age; it isn't who Brussels thinks. 

On 22 June, the US Senate voted (85 to 5) to bar the Federal Reserve from issuing a digital dollar through 2030. The next day, the European Parliament's economic committee approved the legal framework for a digital euro and sent it to final negotiations, aiming for a 2029 launch. 

If you read those two votes side by side, the official story inverts. Europe thinks it just took a stand for monetary sovereignty, when in fact it committed the better part of a decade to defending a position it already holds, when the position it is actually losing sits one layer below, moving at a pace no legislature can match. 

My thesis is that the digital euro is a decoy:

• It targets the layer of the payments stack where Europe is least exposed;
• It doesn't arrive until 2029;
• And it's been weakened before it ships. 

Meanwhile, the dollar is taking over the layer that decides whose money the global economy is cleared in, a strategy the US just confirmed by refusing to build the exact thing Europe is now celebrating. 

Sovereignty: one word, four payment layers

The people legislating ‘sovereignty’ keep using one word for four different things, and in this confusion lies the whole problem.

Payment isn't made out of a single thing, but at least four layers stacked on top of each other: there's the scheme layer, the rules and rails, where Visa and Mastercard live; there's processing and acquiring, where transactions are authorised and money moves; there's the wallet, the consumer interface; and underneath it all sits the settlement layer, where the system ultimately clears in. 

I've spent 22 years working across most of this stack, with issuers, processors, and acquirers. The layers don't carry the same risk, and treating them as a single category produces exactly the kind of policy Europe just passed. 

Take the processing layer, for example. It's already European. Worldline, Nexi, Adyen and Nets dominate European acquiring and processing, so there's no dependency there to fix. 

The scheme layer (cards) is another story, one raising a fair concern: European officials point to nearly two-thirds of eurozone card transactions running through non-European networks. However, Europe is already successfully attacking that layer commercially with Wero. The bank-backed wallet behind the European Payments Initiative (EPI) passed 50 million users in February and moved more than EUR 7.5 billion in its first year. In February, it also linked up with the European Payments Alliance (EuroPA), connecting roughly 130 million users across 13 countries. Effectively, the questions about the scheme layer have an answer: built by the private sector and already shipping. 

Basically, the two card-layer dependencies are either non-existent or being solved. This leaves the settlement layer, and that's the one the digital euro doesn't touch. 

Stablecoins: the settlement layer that actually moved

While Europe spent three years arguing about a retail digital currency, the dollar quietly annexed the settlement layer through stablecoins. 

The numbers aren't close. USD-denominated stablecoins now amount to roughly 317 billion in market value, while EUR-denominated stablecoins sit below one billion. Tether and Circle alone control around 90% of the dollar market. This is the cash leg that tokenized finance, cross-border B2B, and machine-to-machine commerce are starting to settle on, one that is almost entirely USD-denominated. 

None of that is an accident, which Washington isn't hiding, as the GENIUS Act, signed in July 2025, gave private USD stablecoins a federal rulebook. This week's CBDC ban removed the only thing that could have competed with them on a government balance sheet. Put those two together, and you have a deliberate design: regulate the private USD token, kill the public one, and let Tether and Circle carry the dollar into every wallet on earth. 

The ECB understands this perfectly well. Its own analysis acknowledges that the US has framed stablecoin policy as a way to extend the dollar's global role and feed demand for treasuries. A digital USD in a wallet in Lagos or Buenos Aires would read as US government surveillance. A USDT balance reads as freedom: same currency, deniable distribution. 

That's the layer that matters, and a retail digital euro with holding limits adds almost nothing to it. 

Why the digital euro is built to lose slowly

Look at what the digital euro truly is, and not what the press release says. It's a retail instrument designed to feel like cash, with online and offline versions, and privacy for offline payments. Those are genuinely good features for European consumers, and I won't pretend otherwise. As a public payment option that keeps working when a card network goes down, or a foreign provider gets political, it has real value. 

However, it was weakened before it shipped. Commercial banks lobbied successfully for strict holding limits, capping how much anyone can keep in a digital euro so deposits don't flee the banks during a crisis. Basically, the one instrument Europe is building for sovereignty has a ceiling added by the very institutions it's meant to protect. 

It's also slow. A pilot is planned for 2027, a launch for 2029, while the wholesale side, where settlement actually happens, isn't even the same project. The ECB is handling that separately through its Pontes initiative, connecting central bank money to distributed-ledger platforms, with a target for Q3 2026. This is the work that addresses the USD-stablecoin threat: quieter, less funded, and not the one that got the votes and the headlines. 

Europe held a press conference for the retail layer, while the layer that decides sovereignty got a working group. 

Watch who isn't worried

Here's the part I can't document, only infer, so I'll flag it as conviction rather than fact: the companies that should fear a sovereign European payment system the most don't act afraid, they act hedged, and the reason is simple. Every euro of political energy spent on a 2029 retail wallet is energy not spent on the rails that these networks monetise today. 

The incumbents have already bought their insurance. In March, Mastercard agreed to acquire BVNK, a London-built stablecoin infrastructure firm, for up to USD 1.8 billion. Now, a European-built piece of next-generation settlement architecture is American-owned, and that's the tell. While Brussels debated holding limits, an American network bought one of Europe's best on-ramps to the settlement layer. Nobody seemed to notice, because they were looking one layer up. 

Digital money sovereignty: the bet Europe can't copy

Now the uncomfortable part. The move the US just made, not to build a CBDC at all, might be the smarter payment sovereignty move of this decade. 

Conventional wisdom says digital-age monetary sovereignty requires a state-issued digital currency. More than 100 countries are piloting one. China is scaling the digital yuan. Europe is now committed. The US looked at all of that and walked the other way, betting instead on private rails it already dominates. It's a real bet with real risks, since it hands two lightly-supervised companies enormous monetary influence and imports whatever instability they carry. But strategically, the decision is coherent and already winning. 

Europe can't do the same because it has no Tether. Instead, it has banks that want to be paid on the float and a central bank that wants control –  a tension now in the open. A consortium of a dozen large European banks, including ING, BBVA, BNP Paribas, UniCredit and Danske, is building a private EUR stablecoin, on the premise that without a euro on-chain with real liquidity, the only option is the dollar. Lagarde is arguing against them, having said the case for promoting EUR-denominated stablecoins is far weaker than it appears. 

While she may be right on the economics, her own banks looked at the same settlement layer, saw the dollar taking it, and decided they couldn't wait until 2029. When the central bank and the commercial banks can't agree on what sovereignty even requires, you don't have a strategy, only a slogan with a budget. 

What did Brussels actually decide about payments sovereignty?

So, here's what this week really was: Europe didn't choose monetary independence. It chose the most visible layer instead, because that's the one where a politician can claim a win, and scheduled the victory for 2029. 

The dollar already answered the question that matters, on the layer nobody voted on, using private money that ships every month, instead of public money that ships at trilogue speed. 

The digital euro will arrive, will work, and European consumers will have a perfectly good public payment option. One that will land in a world where the cash leg of tokenized finance is already denominated in dollars, because the war for the settlement asset was fought and lost one floor below where Europe stood. 

Payments sovereignty legislated at trilogue speed isn't sovereignty, just a commemorative plaque for territory already given away. 

About the author

Dwayne Gefferie is a payments strategist, data scientist, and advisor with over 22 years of experience in the global payments industry. Unfiltered is his monthly column for The Paypers.