European Central Bank (ECB) President Christine Lagarde has issued a strong call for Europe to reduce its reliance on American and Chinese technology, particularly in the realm of digital payments. Speaking on The Pat Kenny Show during her visit to Ireland, Lagarde described the need for a European alternative to platforms like Visa, Mastercard, PayPal, and Alipay as part of a broader “march towards independence.” Her comments come at a time of heightened economic tensions, with the United States poised to announce tariffs on all EU goods.
Lagarde emphasized that Europe’s dependence on foreign-controlled payment systems leaves the bloc vulnerable. “When you think of it at the moment, a lot of our digital payment—e-commerce or when you use your card or your phone—you always rely on non-European infrastructure,” she said.
“Whether you use a card or a phone, typically it goes through Visa, MasterCard, PayPal, Alipay—where are all those coming from? Either the US or China.” While these companies comply with EU regulations, Lagarde argued that Europe must “make sure there is a European offer. Just in case. You never know.”
A Push for Financial Sovereignty
Lagarde’s remarks reflect a growing concern about Europe’s economic sovereignty in an increasingly polarized global landscape. The ECB President has long advocated for reducing the EU’s reliance on external technologies, particularly in critical areas like digital payments. She believes that having a European-controlled payment infrastructure is essential to ensuring the bloc’s financial independence and security.
This push for sovereignty is closely tied to the EU’s broader economic goals, including the establishment of a Capital Markets Union (CMU). The CMU aims to create a single, unified capital market across member states, improving the flow of investments and savings.
Lagarde has linked progress on the CMU to deeper economic integration, which she argues could ease the pressure on monetary policy and pave the way for a future fiscal union. Estimates suggest that completing the CMU and the Economic and Monetary Union could add up to €2.8 trillion to the EU’s GDP by 2032.
Challenges Ahead
Despite the clear benefits of a European payment platform, the road to achieving it is fraught with challenges. Developing an alternative to global giants like Visa and Mastercard would require massive upfront investment, as well as overcoming significant technical and structural hurdles. These include:
- Profitability Issues: Lower interchange fees in Europe make it harder for payment platforms to generate revenue compared to markets like the U.S.
- Consumer and Merchant Adoption: Shifting entrenched behaviors and persuading banks, businesses, and consumers to adopt a new system would be a significant challenge.
- Technical Complexity: Ensuring security, fraud protection, and cross-border compatibility would require sophisticated technology and coordination.
- Political and Regulatory Alignment: Member states and EU institutions would need to align on governance, execution, and oversight of the new system.
Lagarde’s call for a European payment platform also comes against the backdrop of rising geopolitical tensions. With the U.S. preparing to impose tariffs on EU goods, the need for economic self-sufficiency has become even more urgent. While Lagarde declined to comment on how the EU should respond to the tariffs, she warned that their economic impact would be “wholly negative” and could vary depending on their scope and duration.
A Vision for the Future
Lagarde’s vision for a European-controlled payment system is part of a broader effort to strengthen the EU’s economic resilience. As she noted, the disinflationary process in the eurozone is well underway, and inflation is nearing the ECB’s 2% target. However, she stressed that there is still work to be done to ensure long-term stability.
The creation of a European payment platform would not only enhance financial sovereignty but also serve as a cornerstone for deeper economic integration across the bloc. While the challenges are significant, the potential rewards—both economic and strategic—make it a goal worth pursuing. For Lagarde, this is not just about payments; it is about securing Europe’s place in a rapidly changing global economy.
Sources:
- Business Today – https://www.businesstoday.in/world/us/story/march-to-independence-christine-lagarde-wants-eu-to-ditch-visa-mastercard-for-own-platform-470816-2025-04-05
- Newstalk – https://www.newstalk.com/news/europe-must-end-reliance-on-us-technology-christine-lagarde-2150867
