• James Simcox, COO and CPO at Equals Money x Railsr


• 16.02.2026 12:45 pm
#DigitalEuro #FintechCollaboration

In his recent address in Cyprus, the ECB’s Piero Cipollone didn’t mince his words. He issued a clear warning: Europe must “accelerate” the digital Euro or risk dependence on non-European tech giants. With a pilot targeted for 2027 and potential issuance by 2029, the conversation has moved from theory to implementation.

The ECB has called for a "public-private partnership" to achieve this. True monetary sovereignty cannot be achieved in a silo; it requires an inclusive ecosystem that leverages the agility of the entire financial sector. And this must mean all participants, not just legacy players. 

It is essential that the fintechs and EMIs that currently power Europe’s digital payments infrastructure have a seat at the table during this crucial next phase. 

The "SEPA 2.0" risk

The EU was notoriously slow to open SEPA and TARGET2 rails to non-bank EMIs, giving legacy banks a significant head start. This long delay was not only frustrating for fintechs but also stifled the competition that a dynamic single market was designed to encourage. 

Launching a digital Euro with a “banks-first” mentality would risk a possible “SEPA 2.0” situation. There are lessons to be learned from the rollout of SEPA and TARGET2, where non-bank access evolved gradually. Applying those lessons early could help avoid unnecessary friction and ensure broader participation from day one.

EMIs and PSPs play a vital role in meeting the needs of customers underserved by larger banks, who stand to benefit most from digital finance. Excluding fintechs from the early roll-out phase would result in a sophisticated payment infrastructure that works in theory, but fails to reach the very businesses and consumers it was built to empower. 

Appia: The wholesale advantage

One of the most powerful arguments for the digital Euro is its wholesale application. The ECB’s proposed “Appia” track, which uses tokenised central bank money for settlement, is the key to solving ongoing frictions in cross-border payments. 

Tokenisation enables “atomic settlement,” in which asset transfers and payments occur instantly. For firms operating across borders, this eliminates waiting times and the liquidity costs linked to conventional banking. The ECB says Appia will “shape future-ready, innovative, integrated financial ecosystems” and enable “safe and efficient operations at the global level.” 

The efficiency gains of tokenised central bank money will depend on how widely accessible the infrastructure is. For firms operating across borders, true progress will be measured by faster settlement, improved liquidity and lowered operational friction – not simply by digitising existing processes.

Sovereignty trap

While it is a strategic imperative that the EU provides a sovereign alternative to the USD CBDC or stablecoin, poor delivery could create an adoption trap. Ultimately, businesses will assess the digital Euro on usability, interoperability and reliability. It will succeed only if its user experience matches or exceeds the seamlessness of existing fintech solutions. This is not about creating clever code or algorithms; it is about customer-centric thinking to deliver real-world value.

If the digital Euro fails to enable the pioneering fintechs that already provide the swift, responsive tech stacks customers demand, it could become an unwieldy sovereign tool set aside in favour of nimbler, more intuitive foreign alternatives. 

So far, indications from the ECB have been positive. Early last year, the ECB established an innovation platform with around 70 market participants, including fintechs and PSPs, to test digital Euro payment functionalities and explore innovative use cases. 

The closing report of the preparation phase, published in October 2025, recognises the role of PSPs in the provision of payment account services. The 2023 summary of the investigation phase stated that “PSPs, and not the Eurosystem directly, would have a contractual account management relationship with the end user” including responsibility for onboarding and authentication. 

It is critical that these early steps translate into a greater role for EMIs in shaping the first operational tests of the 2027 real-world pilot phase.

The digital Pound: Lessons for the UK 

With the Bank of England currently in the design phase of a potential digital Pound, it would do well to closely observe the ECB’s ambitious timeline. While the UK has long been a leader in fintech regulation, it must now ensure that its “Digital Pound Lab” prioritises interoperability and direct access for non-banks from the outset. 

This should not simply be a central bank project, but a collaborative effort. 

Early engagement with payment providers and fintechs is essential to ensure these rails are built for the real economy rather than just legacy systems.

For a truly sovereign and effective tokenised future, regulators must look past traditional frameworks and ensure innovative integration with the wider fintech ecosystem from the very start.