A growing divide over the future of money: The US supports regulated private competition, while Europe focuses on the ECB and incumbent banks.
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Washington supports regulated private money. Brussels and Beijing are putting public institutions at the center. This choice can determine whether the Internet of Money is based on dollars or euros.
Regulation, not just code, will determine the future of money.
A clear divide has emerged.
The United States has enacted a federal framework for private stablecoins. Congress also voted to prevent the Federal Reserve from issuing a digital dollar to the public until 2030. The UK is aiming for a similar market-based system.
Europe is taking a different path. The European Central Bank is developing its own digital euro for retail customers, while EU regulations give commercial banks structural advantages over independent non-bank issuers.
Of course, Europe and China are fundamentally different political systems. But their digital money strategies have one thing in common: both put public institutions at the center.
China’s e-CNY is issued by the central bank. Banks and payment companies distribute it, but the People’s Bank of China controls the issuance and core architecture.
The Anglo-American model begins somewhere else. The government sets safety standards. Public institutions support all market participants equally. Private companies then compete to build the products and networks.
That is the real divide. It is not simply a matter of public money versus private money. It’s about centralized design versus market discovery, incumbents versus new entrants, and managed markets versus competition.
Politicians in America. Technocrats in Europe.
In the same 48 hours in June, America and Europe moved in opposite directions when it came to central bank digital money. On June 22, the U.S. Senate voted 85-5 in favor of legislation that would ban a Federal Reserve retail digital currency by the end of 2030. Donald Trump made the issue part of his election campaign and four days after returning to office ordered federal authorities to stop work on such a currency.
On June 23, the Economic Committee of the European Parliament voted 43 votes to 14 with one abstention in favor of further developing the digital euro.
The timing was symbolic. America said no. Europe said yes.
In America, central bank digital money was an election issue. In Europe it remains largely a technocratic project.
This partly reflects the structure of the EU. It is an association of 27 countries and 24 official languages. The political debate remains predominantly national, while the ECB operates above national politics.
No single national electorate has a direct say over the ECB’s priorities. National politicians also have little incentive to support a supranational currency project.
The digital euro has therefore come a long way on the ECB’s autopilot. By the time elected politicians face this, much of the architecture will already have been designed.
Marieke Flament, a former Circle executive and now a board member of the Euro stablecoin project Qivalis, expressed the feeling that Europe woke up late to the consequences:
What a day… At the moment, the rules of the game in Europe and China seem to be more similar than those in the USA.
An EU Council official interviewed for this article was more blunt:
The EU is actually moving to a Chinese model with only a European flag.
Of course, Europe and China are not equivalent political systems. But when it comes to digital money, both view retail payments rails as strategic infrastructure to be designed from the middle, with private companies operating within the resulting architecture.
The United States values common rules, private issuers and competition. The focus is on central design. The other is based on market exploration.
The question for Europe is clear: should public institutions develop the main product or provide a neutral infrastructure on which regulated companies compete?
Europe is tilting the field
To understand why this is important, it’s helpful to understand how money already works.
Modern money has two levels. Central banks issue cash and reserves. Commercial banks generate the majority of digital money used by households and businesses.
The central bank anchors the system. Deposits of commercial banks are convertible and settled at par in central bank money.
This preserves the “uniformity of money”: a euro remains a euro, regardless of which bank issued it.
Stablecoins put private money on new digital tracks. They open the market to new issuers, technologies and services.
However, the European framework for digital money now includes three market groups.
The ECB plans to issue a public digital euro. Banks and regulated non-bank issuers can issue Euro stablecoins. All three groups can offer digital forms of euro money. But they don’t compete on equal terms.
The ECB is both a potential issuer and the gatekeeper of the central bank’s settlement infrastructure. Commercial banks can hold central bank reserves and obtain central bank liquidity. Non-bank issuers cannot protect customer funds with the central bank.
ECB Decision 2025/222 allows qualified non-bank payment companies to open settlement accounts, but expressly prohibits them from using these accounts to protect customer funds.
MiCA also requires non-bank issuers of Euro stablecoins to place 30 to 60% of customer funds in deposits with commercial banks. These banks could also be your competitors.
Europe has created a hierarchy: first the ECB, second commercial banks and third independent issuers. Banks remain the closest thing to risk-free public money. New market entrants must partly depend on them.
This is not a minor technical difference. It influences which forms of digital euro are safest, who bears the commercial banking risk, and whether all digital euros remain one-to-one convertible when markets come under pressure.
The European rules protect the ECB and the established banks in the euro area. But winning at home is not the same as winning worldwide.
The real competition is between the euro, the dollar and other currencies in the emerging Internet of Money. Success will depend on which products and networks win the trust of companies, developers and users around the world.
Domestic privileges do not guarantee global acceptance.
What the rules do
The consequences are already visible.
Europe’s stablecoin initiative Qivalis brings together 37 banks in 15 countries. Its members include BNP Paribas, ING, UniCredit and BBVA.
In the United States, Open USD is being developed by more than 140 companies. These include Visa, Mastercard, Stripe, Coinbase, BlackRock and Google, covering banking, payments, technology, wealth management and crypto.
Both projects aim to create trustworthy private digital money. But one of them is a consortium of established banks. The other is a broad commercial ecosystem.
Europe is producing a banking club. America creates a market.
This difference is not technological. It is the result of regulatory design.
The bigger picture
Europe may also be missing a major strategic opportunity.
Elliott Hentov, chief macro policy strategist at State Street Investment Management, argues that Euro stablecoins could become more than just payment products. If backed by a transparent and diversified pool of euro area government bonds, they could move closer to a European safe-haven asset, create structural demand for euro debt and strengthen the currency’s international role.
He also warns that forcing significant reserves into commercial bank deposits could make Euro stablecoins less resilient in financial stress situations.
He argues that stablecoin policy should be treated as a strategic tool and not as an incidental act of regulation.
This reveals the contradiction underlying the European approach.
Its rules could strengthen the ECB and established banks in Europe while weakening the euro’s competitiveness outside Europe.
The Internet of Money will not be won by the institutions that enjoy the most protection domestically. The currencies, products and networks that attract the best developers and the most users will win.
Europe’s technocrats designed the system.
Their political leaders have yet to decide whether they can win.
https://www.forbes.com/sites/jonegilsson/2026/07/03/europe-and-china-diverge-from-the-us-on-the-future-of-money/