ECB’s Nagel: Euro Strength, Digital Currency Key to Europe’s Sovereignty

22 September 2025

ECB’s Nagel: Euro Strength, Digital Currency Key to Europe’s Sovereignty
Joachim Nagel, president of the Deutsche Bundesbank, at the ECB International Women’s Day 2025 in Frankfurt on March 7, 2025. Photo by Angela Morant/ECB under CC BY-NC-ND 2.0.

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Joachim Nagel on Monday warned that Europe must bolster its economic and financial sovereignty, arguing that a strong euro, deeper capital markets and the development of a digital euro are essential to withstand geopolitical and technological challenges.

Speaking in Frankfurt to the Managerkreis Rhein-Main of the Friedrich-Ebert-Stiftung, Nagel, who heads the Bundesbank, said doubts about Europe’s strategic autonomy and even about the US dollar’s safe-haven status underscored the need for Europe to “recognize the signs of the times”.

Nagel said the euro’s recent 12.5% appreciation against the dollar overstated concerns about exporters, noting that its effective gain against a broader basket was only around 5–6%. Despite the dollar’s weakening, the US currency’s global primacy was not in question, he said, but there were signs of diversification among reserve managers.

A stronger international role for the euro would benefit Europe but requires stability-oriented fiscal policy and more high-quality safe assets, he said. He urged completion of a savings and investment union to channel Europe’s large household savings into innovation, productivity and defence, warning that existing trade and service barriers within the EU remain high.

Nagel cautioned that stablecoins, if left unchecked, could threaten financial stability and monetary sovereignty, but also offered opportunities for efficient, automated payments. Europe’s MiCA regulation provided a framework, but rules might need strengthening, he said.

Nagel said the time was ripe to advance work on a digital euro, which he argued would strengthen the euro’s international role and reduce reliance on non-European payment providers.

Both retail and wholesale forms of central bank digital currency could enhance resilience and autonomy in payments, he said, calling on EU lawmakers to provide a legal basis quickly so the ECB could decide on issuance, potentially no earlier than 2028.

Europe should not resign itself to decline, Nagel concluded. With democracy, rule of law, an integrated market and skilled labor, “we are prepared to take the three steps – for a strong euro, for a sovereign Europe, for a modern and resilient European payments system with the digital euro.”