Core Insights - Monetary sovereignty in Europe is gaining attention with initiatives for a digital euro and euro-backed stablecoins aimed at enhancing European control over payment systems [1] - The evolution of settlement models and the integration of digital assets in capital markets will influence the effectiveness of Europe's payments infrastructure in supporting tokenised finance [2] Digital Euro Initiatives - The digital euro is central to these initiatives, with the EU Parliament's vote on February 10 supporting the European Central Bank's (ECB) proposal for a central bank digital currency [3] - The ECB is in the preparation phase for the digital euro, with a decision expected post-legislative process, and a potential pilot could occur as early as 2027 if political agreement is reached [4] Competitive Environment - The design and implementation of the digital euro must prioritize a dynamic and competitive European single market, leveraging the diverse ecosystem of Electronic Money Institutions (EMIs) and fintechs [5] - EMIs and fintechs are crucial for reaching underserved businesses and consumers, and their involvement in the digital euro's design is essential for the success of euro-based tokenised finance [6] Historical Context and Risks - Historical precedents like SEPA and TARGET2 were primarily designed for banks, delaying non-bank EMIs' participation [7] - There is a risk of repeating past mistakes with a "banks first" approach, which could hinder innovation and create structural biases against firms driving payment innovations in Europe [8]