Policy Brief: The closing window for financial sovereignty

29 July 2026

Europe holds nearly everything it needs to compete
in the next phase of digital finance.
What has been missing is not capability, but action.

Our latest policy brief, Making Euro(pe) Competitive: the closing window for financial sovereignty, sets out a concrete plan for how Europe can compete on its own terms.

Alongside it, we are building a coalition on settlement infrastructure and tokenised deposits, to make both possible in Europe at scale.

Under-exploited, not weak

The euro is the world’s second reserve currency by a wide margin: 20.25% of global allocated foreign-exchange reserves at the end of 2025, against 56.77% for the dollar. Behind it sits the second-deepest pool of high-quality safe assets on earth, with the stock of European supranational safe assets approaching €1.5 trillion by end-2025, alongside institutional credibility no other challenger to the dollar can match.

None of this has followed money on-chain. Tokenised US Treasuries account for roughly $15 billion of the tokenised real-world-asset market, while all tokenised non-US sovereign debt amounts to barely $1.4 billion. The emerging digital financial system is being built on a dollar foundation not because no alternative exists, but because the obvious alternative has not been made available.

A stalemate of Europe’s own making

Internally, a regulatory posture designed to protect incumbents and preserve consensus has become self-defeating. The digital euro distils the contradiction: the design criteria that make it politically acceptable are the same criteria that make it strategically inert as a competitive answer to the dollar. Europe has become the world’s most prolific writer of rules for financial technology while remaining a marginal owner of the systems those rules govern.

Externally, the vacuum is filling fast. Dollar stablecoins are roughly 99% of the global market, the GENIUS Act has made dollar dominance explicit policy, and China has reclassified the e-CNY into interest-bearing deposit money. China has re-engineered its sovereign digital instrument to be worth holding. Europe is engineering its own not to be.

Participation, not duplication

A closed European alternative fails on a bootstrapping problem: liquidity, developers and users are already concentrated on public networks. The objective is not a walled garden but weight inside the networks the world already uses.

The execution divides cleanly. The central bank keeps the shield, a European public hand wields the sword. The ECB retains settlement, central bank money and stability, while a European public-private vehicle builds a resourced presence in public networks. Three packages follow: infrastructure and governance, regulatory easing through narrow amendments to MiCA, and asset deployment of interest-bearing tokenised deposits and tokenised sovereign debt on shared rails.

The window

The next eighteen to twenty-four months secure entry while the market is still contestable, entirely under existing law. Network effects do not wait for legislation.

Inaction is not neutrality. The cost arrives not as a crash but as drift: a currency that is formally sovereign and functionally dependent. The outcome is not predetermined, and the task of this decade is to act while acting still makes a difference.