Joachim Nagel, president of the Bundesbank and head of Germany’s central bank, said on Monday that a digital euro and properly regulated euro-denominated stablecoins could reinforce Europe’s financial independence and lower cross-border payment costs, as he urged the European Union to respond to a rapidly changing global order with a clearer economic strategy.
Speaking at the New Year’s reception of the American Chamber of Commerce in Germany in Frankfurt, the Deutsche Bundesbank president warned that Europe can no longer assume the same degree of security from transatlantic cooperation and the rules-based international system as in the past.
He said Europe should adapt to the new geopolitical landscape by using its own strengths, including its large internal market, single currency, and dense trade ties, rather than turning inward.
The digital euro at the core of payment strategy
Nagel placed the planned digital euro at the center of efforts to make Europe more independent in payments, saying the European Central Bank and national central banks in the Eurosystem are preparing a retail central bank digital currency intended for widespread use across the euro area.
He added that the digital euro would become the first pan-European retail digital payment instrument built entirely on European infrastructure and would help safeguard monetary sovereignty as payments turn digital.
Nagel noted that the Eurosystem has already carried out important exploratory work on a potential wholesale central bank digital currency, which would be used only by financial institutions, allow programmable payments in central bank money, and make financial market processes more efficient.
Stablecoins as complement for cross-border payments
Alongside central bank currency, Nagel pointed to the potential role of euro-denominated stablecoins, saying he saw merit in such instruments, provided they are well designed and subject to strong oversight.
These stablecoins could offer individuals and firms a low-cost option for cross-border payments, he argued, and would complement rather than replace public money in digital form. Together with a digital euro, they could broaden the use of the euro in global transactions and support its international role, he added.
Simplifying rules and unlocking Europe’s savings
Nagel linked the digital agenda to a broader economic program for Europe built on three priorities: simpler regulation, deeper capital markets, and a stronger global position for the euro.
He criticized the extraordinary complexity and rigidity of many rules in the European Union and warned against additional “gold-plating” at the national level. The problem, he said, is not the existence of rules but the administrative burden they create for businesses and investors.
Nagel welcomed moves by the European Commission to streamline regulation and said a high-level task force set up by the ECB Governing Council, on which he serves, is examining how to simplify financial regulation and banking supervision while preserving stability.
He called for more investment in energy and digital infrastructure, especially renewables and artificial intelligence, and argued that a “Savings and Investments Union” could better channel Europe’s high savings into innovation, productivity, and competitiveness.
Transatlantic bond under pressure yet remains central
Nagel framed his proposals against a series of changing transatlantic relations. The United States is the largest export market for Germany and the EU, and mutual foreign direct investment remains extensive, but he said the “previously solid ground” of shared values and security now seems less firm.
He noted that Washington is rethinking the benefits of earlier forms of multilateralism, while Europe itself is placing more emphasis on its own strategic priorities. As an economy deeply integrated into global trade and value chains, Europe is particularly exposed to geoeconomic fragmentation, which has weighed on growth and competitiveness in recent years.
Nagel insisted that Europe should still back open, rules-based trade and seek to uphold transatlantic cooperation, saying it is crucial to remain in dialogue and search for common solutions, even during periods of tension.
Closing his speech with a reference to Mexican novelist Homero Aridjis, who wrote of years in which “centuries pass,” Nagel said it is unclear whether 2026 or 2027 will mark such turning points. He argued, however, that Europe can navigate the new reality if it acts decisively on digital money, capital markets, and regulatory reform while making full use of its internal market and single currency.
