BRUSSELS — The right to use Swiss franc banknotes and coins will be enshrined in Switzerland’s constitution after voters on Sunday backed a measure designed to safeguard the use of cash in society. Preliminary official estimates revealed 69 percent of voters backed the legal amendment, which the government proposed as a counter to a similar initiative by a group called the Swiss Freedom Movement. The Swiss Freedom Movement triggered the national referendum after its initiative to protect cash collected more than 100,000 signatures, triggering a national referendum. Its initiative secured only 46 percent of the final vote after the government said some of the group’s proposed amendments went too far. The vote means Switzerland will join the likes of Hungary, Slovakia and Slovenia, which have already written the right to cold, hard cash in their constitutions. Austrian politicians are also debating whether to follow suit, as people’s payment habits become increasingly digital — especially since the pandemic. The trend has fanned Big Brother conspiracy theories that governments aim to control populations by withdrawing cash altogether. The European Central Bank’s plans to issue a virtual extension of the euro have fanned those fears, prompting the EU’s executive arm to propose a bill that will cement physical cash in societies across the bloc. Switzerland, too, has seen a drop in cash payments over the past decade. More than seven out of 10 payments at the till were in cash in 2017. In 2024, cash only featured in 30 percent of in-shop transactions, according to data from the Swiss National Bank. The Swiss Freedom Movement has previously pursued campaigns to sack unpopular government ministers, ban electronic voting, and protect citizens from professional or social retribution if they refuse to be vaccinated against Covid-19 — none of which made it to the ballot box.

FRANKFURT — The head of Germany’s central bank has called for the EU to issue more joint debt, putting him at odds with Chancellor Friedrich Merz who wants to keep it strictly as a response to emergencies. “To make Europe attractive also means to attract investors from outside,” the German central bank governor, Joachim Nagel, told POLITICO ahead of an informal summit of EU leaders on Thursday to address the bloc’s economic challenges. “A more liquid European market when it comes to safe European assets would support that.” Eurozone central bankers — who have for the first time coalesced around support for joint debt — have sent EU leaders a wish-list of reforms to ensure that Europe’s economy can reform and keep pace with the U.S. and China. The European Central Bank’s policymakers, Nagel said in an interview on Friday, see “the benefits of creating a common European, highly liquid, euro-wide benchmark safe asset. Action is necessary.” But Nagel’s break from Germany’s traditional opposition to joint debt comes at an awkward time for Berlin. Earlier this week, the German government rebuked a rallying call from French President Emmanuel Macron to issue more eurobonds to boost certain sectors, such as artificial intelligence, European defense, semiconductors and robotics. The EU could also exploit U.S. President Donald Trump’s erratic foreign policy goals and lure global investors across the Atlantic. “The global market … is more and more afraid of the American greenback. It’s looking for alternatives. Let’s offer it European debt,” Macron told a group of reporters on Monday. Joint debt, known by the market shorthand of “eurobonds,” has long been a divisive topic. Since the sovereign debt crisis, southern European governments have pushed for eurobonds to spread the burden of national debt more evenly across the region. Frugal northern states, by contrast, have warned they risk undermining fiscal discipline — and have refused to put their taxpayers on the hook for debts racked up elsewhere. The Bundesbank has long been the de facto leader of the skeptics in northern and central Europe who believe eurobonds are best suited to isolated crises that require drastic action. These include an €800 billion post-pandemic recovery plan and a €90 billion loan to Ukraine to finance its defense against Russia. The last thing the so-called frugal bloc wants is for the EU to get into the habit of raising common debt to solve all of its issues. But times are fast changing. “Tradition is something that is a reflection of the reality of the past,” Nagel said when asked about the Bundesbank’s shift, stressing that Europe’s security has not been as threatened as today since World War II. “Now we have a different reality.” EUROBONDS, WITH LIMITS Support for joint debt does not mean the Bundesbank is dropping its commitment to ensuring sound fiscal policies. A European asset would only support “specific purposes,” and “how it is controlled by the European authorities and the Member States should be equally clear,” the 59-year-old said. Eurobonds must also be accompanied by debt reduction at the national level. “European debt is not a free lunch. And doubts about fiscal sustainability should not jeopardize the chances for improved common policies,” he said. Nagel stopped short of saying how much EU debt is needed to achieve real change. “I won’t give you a number,” he said, but added that “if you want to create something liquid, you have to give the markets an indication about the volume that you will supply over a certain period of time and for a certain purpose.” The central banker would not be drawn into whether Berlin might also adjust its views to reflect the new reality. “I see my role as giving advice on what could be a way out of a complicated situation that we are confronted with in Germany and in Europe,” he said. AUTONOMY, NOT SUPREMACY But a more efficient euro capital market is only one front in the battle to secure Europe’s economic independence and autonomy, Nagel said, adding that it will be equally important to ensure that the continent’s payment system can function independently from outside pressure. “Payment solutions, in an extreme scenario, could be weaponized,” he said.  Accordingly, he argued, the bloc needs to break the duopoly that U.S. credit card giants Mastercard and Visa hold over Europe’s payment rails across its borders. The key to payment security, he went on, is to mint a virtual extension of euro banknotes and coins that can settle transactions across the EU in seconds. The twin projects of the digital euro and perfecting the euro capital market may help boost Europe’s strength and autonomy, but still don’t amount to a masterplan to steal the dollar’s crown. And Nagel added that last week’s hint by the ECB about expanding its liquidity lines to central banks around the world, securing companies’ access to euros in times of stress, should not be seen as motivated by a political desire to boost the euro. “It is about monetary policy,” he said. Since last summer, Lagarde has urged Europe to seize a “global euro moment” as cracks began to appear in U.S. dollar dominance. While Nagel believes that “the euro could play here a significant role” as investors rebalance their portfolios to adjust to the new reality, he is not a fan of quick shifts. “I’m not in favor of fast tracking, jumping from one level to the next,” he said. “Often, such a development is not a very healthy one. I’m comfortable with gradual progress on the international role of the euro, as long as it’s moving in the right direction.”

The European Central Bank has taken a big step toward integrating blockchain-style finance into the eurozone’s financial system, announcing that assets issued using distributed ledger technology (DLT) will be accepted as collateral in Eurosystem credit operations. Under the decision, marketable assets issued in central securities depositories (CSDs) that use DLT-based services will become eligible collateral from 30 March 2026, provided they meet existing rules. These include compliance with the CSD Regulation and availability for settlement through the ECB’s TARGET2-Securities (T2S) settlement system. The Bank said it will continue to align its collateral framework and collateral management practices to keep pace with technological change, while preserving the core principles of safety, efficiency and equal treatment across markets. It is therefore exploring “if, how and under what criteria” assets issued using DLT and not represented in eligible securities settlement systems could become eligible and be mobilized as Eurosystem collateral in the future. A staggered approach is planned, allowing subsets of DLT-based assets to be gradually admitted as market conditions and the legal and regulatory framework evolve. The review will consider developments in EU financial law, including the CSD Regulation, the DLT Pilot Regime, Market in Crypto Assets Regulation and national securities laws, the ECB said. “These decisions reflect the Eurosystem’s continued commitment to encouraging innovation and technological progress, thus enhancing market efficiency, and contributing to the integration of European capital markets,” the statement said.

EU governments pursued additional privacy safeguards to ensure people’s payment habits are kept under wraps as part of a legislative framework for minting a virtual extension of euro banknotes and coins. The Council of the EU rubberstamped its negotiating position for a digital euro on Friday afternoon after clinching a deal earlier this week, as reported by POLITICO. The onus is now on members of the European Parliament to agree on a legal text so that both sides can begin legislative negotiations next year. The digital euro was the European Central Bank’s answer to Meta’s (failed) plan to launch its own virtual currency, called Diem, for its 3 billion users. Since Diem’s demise, ECB policymakers have pitched the project as a vital strategy to reduce the bloc’s reliance on U.S. credit card giants, Mastercard and Visa, for cross-border payments. EU shoppers would be able to pay with the virtual currency, backed by the central bank, across the bloc in the form of plastic or a smartphone app. The spread of Big Brother-style conspiracy theories, meanwhile, has forced policymakers to take extra precautions to reassure the public that authorities will not use the digital euro to snoop on people’s payment habits. “You cannot disregard” the concern of “many millions of citizens,” Fernando Navarrete, the center-right MEP shepherding the bill through the Parliament, told POLITICO in November. “In China, it’s explicit that they wanted to build [a digital yuan] in order to increase control over the people. I’m scared of this.” Navarrete, who hails from the European People’s Party, is highly skeptical of the initiative but is comfortable with the notion of an offline version of the digital euro that protects people’s privacy. “I’m not saying it will be used” for snooping, “but they know that the technology has potential,” he said. On the contrary, consumer groups have praised the initiative, assuming the digital euro is safe, free, and private. Banks are far less enthusiastic. Especially, as they’ll be on the hook for distributing basic digital euro services to their clients at no extra cost — a bill that could amount to over €5 billion over four years, according to ECB estimates. Bankers’ protests aside, the biggest obstacle facing the digital euro is countering conspiracy theories that the authorities will use the ECB’s project to control the populace — despite reassurances from the European Commission and the ECB. The Commission’s original proposal and the ECB’s envisioned design for the project already prevent the central bank from matching people’s digital euro accounts with citizens’ personal data. That wasn’t enough for some countries, in particular Belgium and the Netherlands, which fear the project could be politically weaponized. The final text has even strengthened privacy safeguards, making it explicit that central banks “shall not be in a position to lift these [segregation] measures during any processing of the data.” APPEASING THE BANKS Mindful of the crucial role that banks will play in getting digital euros into citizens’ virtual wallets, EU governments have tried to make the project more palatable for the industry. The key to pleasing bankers is ensuring they make money from the initiative. Once the digital euro is minted, banks can charge shopkeepers a fee for processing transactions at the cashier. These fees would be capped at the average cost of international and domestic debit cards for at least five years until the overall cost of distributing the digital euro becomes more stable. Then, new fees can be calculated. The bankers aren’t convinced, however. The Council’s bid to get banks “a ‘fair’ remuneration,” while making digital euro payments “cheaper for merchants and consumers,” is a ‘squaring the circle problem’ [that] cannot be solved,” Tobias Tenner, head of digital finance at the German banks association, said. “At least if one takes the huge necessary investments [for banks] into account.”

LONDON — The British government is considering a ban on cryptocurrency donations to political parties — in a move that could set off alarm bells in Nigel Farage’s Reform UK. Farage’s populist party — surging ahead in U.K. opinion polls — opened the door to digital asset donations earlier this year as part of a promised “crypto revolution” in Britain, and has already accepted its first donations in the digital assets. A clampdown by the British government was absent from a policy paper outlining its upcoming Elections Bill, which is being billed as a plan to shore up British democracy. But officials are now considering measures to outlaw the use of crypto to fund U.K. politicians, according to three people familiar with recent discussions on the bill. The government did not deny that the move was under consideration, saying it would “set out further details in our Elections Bill.” Reform UK became the first British political party to accept crypto donations earlier this year. Farage told Reuters in October that his party had received “a couple” of donations in the form of crypto assets after the Electoral Commission — which regulates U.K. political donations — confirmed it had been notified of the first crypto donation in British politics. Reform has set up its own crypto donations portal and promised “enhanced” controls to avoid any misuse. Reform has set up its own crypto donations portal and promised “enhanced” controls to avoid any misuse. | Dan Kitwood/Getty Images Farage, who holds some long-term crypto assets, has told the sector he is the “only hope” for Britain’s crypto business as he seeks to emulate his long-term ally U.S. President Donald Trump’s wide embrace of digital currencies. Farage has stressed he was “way before Trump” in publicly backing cryptocurrencies. HARD TO TRACK Despite the absence of a clampdown from initial public plans for the government’s elections bill — which included measures ranging from lowering the voting age to 16 to strengthened powers for the electoral commission — the British government, which is trailing Reform in the polls, has been under pressure to adopt a ban on the practice. Among those who have floated a clampdown are then-Cabinet Office Minister Pat McFadden, Business Select Committee Chair Liam Byrne, and Phil Brickell, the Labour MP who chairs the All-Party Parliamentary Group (APPG) on Anti-Corruption and Fair Tax. Transparency experts have warned that the source of cryptocurrency donations can be difficult to track. That raises concerns that foreign donations to political parties and candidates — banned in almost all circumstances under British law — as well as the proceeds of crime and money laundering could slip through the net. Labour’s elections bill is also expected to place new requirements on political parties and their donors. It is set to include a clampdown on donations from shell companies and unincorporated associations, and could force parties to record and keep a risk assessment of donations that could pose a risk of foreign interference. Crypto is an emerging battleground of foreign interference, with Russia and its intelligence services increasingly embracing digital currencies to evade sanctions and finance destabilization — such as in Moldovan elections — after being cut off from the global banking system following Moscow’s full-scale invasion of Ukraine. Russian involvement in British politics has come under fresh scrutiny in recent months after Nathan Gill — the former head of Reform in Wales who was also an MEP in Farage’s Brexit Party — was jailed last month for over 10 years after being paid to make pro-Russian statements in the European Parliament. Farage has strongly distanced himself from Gill, describing the former MEP as a “bad apple” who had betrayed him. Nevertheless, Labour has since gone on the offensive, with Prime Minister Keir Starmer urging Farage to launch an internal investigation into Gill’s activities. According to a spokesperson for the Ministry of Housing, Communities and Local Government, which has responsibility for the bill, “The political finance system we inherited has left our democracy vulnerable to foreign interference.  “Our tough new rules on political donations, as set out in our Elections Strategy, will protect U.K. elections while making sure parties can continue to fund themselves.”

LONDON — Britain’s financial watchdogs have been on a crypto journey — with a little help from Donald Trump.  The Bank of England publishes its long-awaited rules for stablecoin Monday. Two years after the central bank’s Governor Andrew Bailey dismissed the virtual currency — a theoretically more stable form of crypto — as “not money,” its rulebook is now expected to get a cautious welcome from an industry that’s been lobbying hard for a rethink. It would mark quite a shift from the U.K. central bank. Stablecoins “are not robust and, as currently organized, do not meet the standards we expect of safe money in the financial system,” Bailey told a City of London audience in 2023.  Now his top officials herald a “fabulous opportunity.”  The Bank chief’s initial position — that he doesn’t see stablecoins as a substitute for commercial bank money — has put him at odds with the U.K. Treasury, which is on an all-consuming mission to get the sluggish British economy moving. Chancellor Rachel Reeves wants the U.K. “at the forefront of digital asset innovation.”  The United States crypto lobby, fresh from several wins stateside, spied an opportunity. Exploiting those divisions — and pointing to a more gung-ho approach from Trump’s U.S. — has allowed firms to push for a British regime that more closely aligns with their own.  Monday could be a very good day at the office.  TREADING CAREFULLY Stablecoins are a type of cryptocurrency pegged to a real asset, like the dollar, with the largest and best-known offering being Tether. They’re seen as a more palatable version of crypto, and are used by investors to buy other cryptocurrencies, or allow cross-border payments.  The pro-stablecoin camp says their development is necessary to improve payments and overseas transactions for businesses and consumers, particularly as cash usage declines and sending money abroad remains clunky and expensive. If done well, a stablecoin could maintain a reliable store of value and be a viable alternative to cash.  Stablecoins (USDT) are a type of cryptocurrency pegged to a real asset. | Silas Stein/picture alliance via Getty Images Those more cautious, including the BoE, warn there are risks for the wider financial system including undermining public confidence in money and payments if something goes wrong.  And stablecoins are not immune to things going wrong: In 2022, the Terra Luna token lost 99 percent of its value, along with its sister token TerraUSD, a stablecoin which went from being pegged to the dollar on a $1-1 TerraUSDbasis, to being valued at $0.4. Tether also fell during that time to $0.95.  Other central bankers seem to agree with Bailey’s early caution. The Bank for International Settlements, a central bank body, issued a stark warning on stablecoins in June, saying they “fall short” as a form of sound money.  There are also concerns such coins are used to skirt money-laundering laws, with anti-money laundering watchdog the Financial Action Task Force, warning that most on-chain illicit transactions involved stablecoins. The EU has tough regulation in place for digital assets. The bloc prioritizes tighter control over the market than the U.S., with stricter rules on capital and operations.  That’s in stark contrast to the U.S., which passed its own stablecoin regulation — the GENIUS act — earlier this year, which is much more industry-friendly. Donald Trump, whose family is building its own crypto empire, has described stablecoins as “perhaps the greatest revolution in financial technology since the birth of the Internet itself.”  That’s put post-Brexit Britain in a bind: align with the EU, the U.S., or go it alone?  “The U.K. is a bit caught,” a former Bank of England official who now works in digital assets said. They were granted anonymity, like others in this article, to speak freely. “It doesn’t have the luxury of completely creating a bespoke regime. It can do, but essentially, no one’s going to care.” AMERICAN PUSH For a Labour government intent on deregulating for growth, aligning with the U.S. was immediately a more attractive proposition.  Warnings came from the City of London, Britain’s financial powerhouse, that the government would need to embrace crypto and stablecoin for the U.K. to become a global player. Domestic financial services firms wrote to the government calling for it to align its regime with the U.S., talking up “once-in-a-generation opportunity” to establish the future rules for digital assets.   “Securities are getting tokenized,” said one former Treasury official, now working in the private sector. “Bank deposits are getting tokenized. If we don’t build a regime that is permissive enough [to make the U.K. attractive], then the City’s relevance will diminish as a consequence.”  For the pro-crypto brigade, the BoE has been the main hurdle in achieving a U.S.-style, free-market stablecoin rulebook. Reform UK leader Nigel Farage, whose party is currently leading in the polls, accused Bailey of behaving like a “dinosaur.  For the pro-crypto brigade, the BoE has been the main hurdle in achieving a U.S.-style, free-market stablecoin rulebook. | Niklas Helle’n/AFP via Getty Images “The Bank’s really got itself into a twist on this one. From what I understand from people who have been at the Bank, this is coming from the top,” said the former BoE employee quoted above.  “Andrew Bailey has made it publicly clear for some many months now that he is sceptical about the two new alternative forms of money, which is stablecoins and central bank digital currencies,” said a financial services firm CEO.  In recent weeks, however, Bailey and his colleagues have softened their rhetoric as well as indicating a relaxed policy is forthcoming.  Sarah Breeden, Bailey’s deputy governor for financial stability, has repeatedly said any limits on stablecoin will be temporary, and recent reports suggest there will be carve-outs for certain firms. Other BoE officials have also backed away from tougher rules on the assets which must be used to underpin the value of a stablecoin.  A second former BoE employee, who now works in the fintech industry, said Bailey was “under a huge amount of pressure, from the government and the industry. He is worried about looking like he is just anti-innovation.”  The BoE declined to comment. The Treasury did not respond to a request for comment. US interest  A state visit by Trump to the U.K. this fall appeared to help shift the debate.   In late September, the Trump administration and the British government agreed to explore ways to collaborate on digital asset rules.  Treasury Secretary Scott Bessent and Reeves announced that financial regulators and officials from the U.S. and U.K. would convene a “Transatlantic Taskforce for Markets of the Future.”  During Trump’s visit, Bessent held a financial services roundtable in London with key figures from industry. “There was a steady slate of crypto attendees there, and the discussion predominantly focused on stablecoins,” said the former Treasury official.  “Rachel Reeves met Scott Bessent and seems to have been told, actually, we’d like you to be much more supportive of … digital assets,” the financial services CEO added.   The U.K. Treasury has been “pretty proactive” in taking meetings with crypto firms and traditional finance firms interested in crypto, in the New York consulate and British embassy in Washington, added the former Treasury official.   The BoE too met with the crypto industry and U.S. politicians, with Breeden at the helm of discussions while she was in the U.S. in October for IMF-World Bank meetings, in an effort to better understand U.S. stablecoin rules.  Last month saw a major olive branch.  A Bailey-penned op-ed in the Financial Times saw the Bank chief recognize stablecoins’ “potential in driving innovation in payments systems both at home and across borders.”   Going further still, Breeden told a crypto conference just this month that synchronization between the U.S. and the U.K. on stablecoin marks a “fabulous opportunity.”  She has heavily indicated there will be more than a slight American influence when she announces the proposals on Nov. 10. “It’s a fabulous opportunity, to reengineer the financial system with these new technologies,” Breeden told the Nov. 5 crypto conference.  “I think a lot of people have observed that it was the U.S. crypto firms that really pushed the dial on getting political will, whereas British firms haven’t been able to secure that,” the former Treasury official said.

SOFIA — The euro is more than just a currency: it’s a geopolitical insurance policy in a fragmenting world. That was the message the EU’s most senior economic leaders sent to a skeptical Bulgarian public during a pro-euro charm offensive in Sofia on Tuesday. Bulgaria is due to adopt the euro on Jan. 1, 2026, but only about half the population supports joining the single currency. Fears about inflation and centralization of power in Brussels and Frankfurt — exacerbated by alleged Russian disinformation campaigns — have turned many against the project. In a push to ease these concerns, Economy Commissioner Valdis Dombrovskis and European Central Bank President Christine Lagarde each stressed the geopolitical benefits of joining the euro. “Bulgaria is joining the euro … at a point when there is more volatility, at a time when we have more shocks, one after the other, compounded, and at a time where the global order, as we have known it, is more fragmented, and when friends are probably fewer,” said Lagarde, adding: “It’s important to close ranks and to be together.” Lagarde said that during the financial crisis, the single currency had proved a defensive shield against shocks and depreciation. Dombrovkis said that, in itself, the adoption of the euro could help Bulgaria compensate for growing geopolitical risks in investors’ eyes. “In Baltic countries, despite being geopolitically exposed, the borrowing costs were lower than in Poland, and to a large extent investors assessed that [the euro] is a stabilizing factor,” he said. Bulgaria’s accession to the euro has been planned for more than a decade, but as the date got nearer, it has spawned conspiracy theories and populist politics, alongside more justified concerns about the currency changeover. Investigative reports have identified Russian-funded social media campaigns to undermine support for the euro. Last April, the far-right party Revival, which arranged several anti-euro protests over the last year, signed a deal with Vladimir Putin’s Russia United. The percentage of Bulgarians who support the euro has slightly increased in the last few months. | Nikolay Doychinov/Getty Images Asked about Russian influence on public opinion about the euro, Dombrovskis said: “It is not a secret that Russia is waging a hybrid war against Europe and European member states. It is provocation, acts of sabotage, violation of European airspace, meddling in political processes in the European Union, also in other countries, and it is spreading disinformation.” The percentage of Bulgarians who support the euro has slightly increased in the last few months, reaching 51 percent according to a survey cited by Finance Minister Temenuzhka Petkova — up from 45 percent earlier in the year. European Stability Mechanism chief Pierre Gramegna highlighted risks coming from Washington’s new approach to monetary policy and cryptocurrencies: “The U.S. administration is changing its position on so many topics, including on finance and currency, that being part of a large bloc is a huge advantage,” he said, adding people in Bulgaria are not fully conscious of this. “The risk entailed in the digital currencies can be faced better if we are in the euro area,” he said.

BRUSSELS — Global finance regulators’ failure to impose sufficient rules on cryptocurrency could threaten the world’s financial stability, global risk body the Financial Stability Board has warned. Reviewing the rollout of a global framework for crypto rules, the FSB said there are “significant gaps and inconsistencies” in implementing the rules, which could “pose risks to financial stability and to the development of a resilient digital asset ecosystem.” On the regulation of stablecoins, which are virtual currencies pegged to real-world assets, the FSB said regulation is “lagging.” Because of the international, decentralized nature of financial technologies like crypto, having gaps in global rules is an issue as providers can go wherever the rules are the most lax, which “complicates oversight,” the review said. It added that global cooperation on regulating the currencies is “fragmented, inconsistent, and insufficient” to address their global nature. The FSB also flagged gaps in oversight of crypto service providers, saying supervision of “potentially higher risk activities, such as borrowing, lending, and margin trading, is often lacking” and enforcement can “lag behind regulatory development.” The review recommended that governments implement the global crypto framework fully. It also said they should “conduct an assessment of the scale and nature of cross-border crypto-asset activities into and out of their jurisdictions” at the “appropriate time.” Earlier this week, FSB chair Andrew Bailey warned G20 finance ministers and central bank governors that stablecoins are a potential area of vulnerability for the financial system.

Nigel Farage and co. are taking aim at the Bank of England in a way that may help Chancellor Rachel Reeves out of her budget woes — if she dares go along with it. The Reform U.K. leader and his deputy Richard Tice dropped in on Bank Governor Andrew Bailey on Thursday to press him into changes in monetary policy that could help trim the public sector’s interest bill, but which could also unnerve investors.  The Reform U.K. leader and his deputy Richard Tice said they had urged Bailey at their meeting to stop paying interest on the excess money created by the Bank during a decade of ‘quantitative easing.’ That money is now largely held on deposit back at the BoE by commercial banks, which earn a risk-free return of 4 percent on it at the current Bank Rate. Critics on both right and left wings of the political spectrum argue that amounts to a massive taxpayer subsidy to the banks. The Reform duo also urged the Bank to stop the active selling of the gilts it bought during the QE period, something that several analysts and investors have argued is putting unnecessary upward pressure on the government’s borrowing costs. Tice told POLITICO on Thursday that stopping gilt sales alone could have taken around £1.5 billion off the government’s bill for debt interest this year. The Bank argues that the taxpayer wouldn’t end up paying any less in the long run, though. Reform is now seeking a full parliamentary debate on ‘quantitative tightening’, or QT, when MPs return from their recess, something he may get in the second half of next month if the Leader of the House of Commons is sympathetic. “It’s much more powerful as a debate in government time, as opposed to a backbench business debate,” Tice argued. The political argument is simple. “If Parliament via the Chancellor of the Exchequer gave a different steer to the Bank of England, this could significantly reduce the need for tax rises at the Budget,” Tice said in a statement released after the meeting. Reeves can ill afford to ignore anything that will raise money at a time when sluggish growth and productivity and constant increases in spending have made it all but impossible for her to stick to her own self-defined fiscal rule. And left-leaning think-tanks such as the Institute for Public Policy Research and Positive Money have already come to much the same conclusions. Yet Reform’s high-volume handling of a meeting that the Bank styled as a routine meeting with elected politicians represents something of a break with convention. Since Tony Blair’s government granted the Bank independence in 1997, party leaders have refrained from appearing to give instruction to the Bank on how to conduct monetary policy. Tice, however, in comments to POLITICO, argued that the issue is essentially a fiscal one, since the losses incurred by the Bank through QT have to be picked up by the taxpayer. “Parliament has failed in its duty to give the Bank more direction and support in this area,” he said. “It’s left the Bank to make its own decision and sort of … swing in the wind.” A spokesperson for the Bank said the Governor “had a productive meeting with Reform U.K. | Jordan Pettitt/Getty Images Reform’s intervention comes at a time when U.S. President Donald Trump is putting heavy pressure on the Federal Reserve to cut interest rates to support flagging growth. By contrast, talking to POLITICO, Tice said he and Farage had “absolutely not” put any pressure on Bailey to lower rates. A spokesperson for the Bank said the Governor “had a productive meeting with Reform U.K. on Thursday as part of the Bank’s engagement with political representatives,” but declined to elaborate.  Tice and Farage said the meeting also covered cryptocurrency and stablecoins, an issue where the MP for Clacton has called the Bank “out of touch” and “behaving like a dinosaur.” Farage was particularly incensed by the Bank’s proposal to put a limit of £10,000 on the amount of stablecoins that investors can hold. The Bank expects to publish formal proposals on stablecoin regulation by the end of 2025. 

As bronzed Eurocrats return from summer holidays to face the usual September onslaught of lobbyists in Brussels, this year they’ll find an unlikely interest group waiting at their doors: the European Central Bank. The hot topic on the ECB’s agenda is the digital euro — a proposed electronic version of the physical euro that has banks and right-leaning politicians fuming. The debate is heating up as European Union member countries try to reach a final agreement on how the digital euro should work by the end of this year. But the European Parliament also needs to approve it, with serious talks likely to heat up over the fall. At its core, the digital euro is a new payment method with an undertone of geopolitics. Without virtual banknotes and coins, the ECB fears its monetary authority will disintegrate in a digital age where cash payments are declining. It’s pushing the digital euro because it argues that sitting idle makes the European Union too reliant on U.S. credit card giants Mastercard and Visa to handle cross-border transactions. Worse yet, data-hungry tech companies such as Meta, Apple or X could try for a piece of the payments pie, leaving Europe at the mercy of foreign interests. The arrival of United States President Donald Trump has only heightened anxieties, especially since the White House has shown little restraint in pressuring companies to achieve his goals. Trump also signed the Genius Act, which aims to turbocharge certain crypto assets called stablecoins. Stablecoins differ from wildly fluctuating cryptocurrencies like Bitcoin because their value is pegged to a fiat currency, in most cases the U.S. dollar. This makes stablecoins far more … well, stable, than other cryptocurrencies, meaning they represent a genuine threat to old-fashioned currencies like the euro — particularly for cross-border payments. The pressure is on. The ECB is ramping up its lobbying program, participating in a series of seminars for members of the European Parliament in September — followed by a visit from the central bank’s chief cheerleader for the project, Piero Cipollone. ECB executives will also have the chance to champion the digital euro later this month when EU finance ministers and central bankers gather in Copenhagen. But for once, EU finance ministers are not the ECB’s main concern; its chief target is a Spaniard by the name of Fernando Navarrete. A central banker-turned-center-right EU lawmaker, Navarrete is in charge of negotiating the digital euro’s legal framework through the Parliament. The problem for the ECB is that Navarrete is seriously skeptical. Here are four things you need to know about the looming fight over the digital euro. WHAT IS THE DIGITAL EURO? Simply put, the digital euro is a virtual extension of the EU’s single currency.  The concept of central bank digital currencies, or CBDC, has existed for many years, although it has rarely made it past the conceptual phase. The ECB got serious about creating one in 2019 after Facebook owner Meta tried and failed to introduce its own global virtual currency for its 3 billion users in the form of a stablecoin. The digital euro would be backed by the ECB and would hold the same value as real money, complementing cash and cards. People would use the virtual money to pay for goods and services, or lend it to friends. The difference is that digital euros would most likely be stored on a wallet-like application on smartphones. The ECB would also keep its own record of the virtual money people hold, making it impossible to lose. HOW IS THAT DIFFERENT FROM TODAY’S DIGITAL PAYMENTS? The big difference is that the digital euro would be central bank-issued legal digital tender that, in theory, doesn’t require a commercial bank’s involvement — which is quite revolutionary. Money held in a commercial bank account is not sitting in a vault waiting for you to claim it. Most of it has actually been lent out in the form of mortgages and other types of loans, with only a small portion of it sitting in cash reserves. The money you think you have in your bank account isn’t actually there; it’s really just the bank’s promise to pay you that money, should you decide to claim it. But banks are counting on customers not claiming it — at least not all at once. Without safeguards in place, a bank would collapse if all its customers demanded all their cash at once. But for once, EU finance ministers are not the ECB’s main concern; its chief target is a Spaniard by the name of Fernando Navarrete. | David Zorrakino/Europa Press via Getty Images The proposed digital euro is entirely different. It is sitting in a (digital) vault waiting for you. No one else will have borrowed it to buy a house or start a business. One digital euro in your digital wallet would be as legally real as one physical euro in your pocket. And because the ECB would have a record of how many digital euros you possess, this makes it even more secure than physical cash — which can more easily be stolen, lost or destroyed. Payments by digital euro would therefore (theoretically) be simpler than today’s digital payments. Rather than your bank having to settle a mind-bendingly complex and behind-the-scenes transaction with the vendor’s bank using third-party payments companies (like Visa or Mastercard), you would simply send the digital euros from your digital wallet directly to the vendor’s digital wallet. It would be just like handing over cash. On paper, no banks or payment companies need be involved — although in practice, they would need to participate in the digital euro’s distribution. In other words, a digital euro would break the private sector’s hold on digital payments. WHERE IS THE PROPOSAL AT? Stuck in Brussels. Although the digital euro is the ECB’s baby, EU governments and members of the European Parliament are the ones tasked with putting the project’s legislative framework together. That has blended politics into the debate, muddying the waters from the perspective of technocrats. MEPs, for example, have heeded concerns that governments could use the digital euro for snooping on people’s payments — a notion the ECB has trashed.  Many within the banking and financial industry, meanwhile, have branded the project “a solution looking for a problem” amid fears they’ll foot the bill for implementing the infrastructure needed to run the digital euro. Its introduction could also stifle future innovation by dictating the future direction of the EU’s payment industry, they argue. Industry lobbying has paid off. Navarrete has called the digital euro “a last resort” and “a nuclear threat” that will force the industry to develop a cross-border payment system before the bill is ready. WILL THE ECB SUCCEED? The Parliament is only one beast the ECB has to contend with. Government officials in the Council of the EU, which represents the various member countries of the bloc, aim to finalize their negotiating position on the digital euro bill by year’s end. Their involvement has the ECB on edge as well — especially as the Council wants to have the last say on how many digital euros a citizen can hold at any one time, to placate lender fears of a bank run. Another ongoing debate is whether banks should get a cut for distributing digital euros and ensuring their payment rails accept and profit from transactions with virtual banknotes at the cashier’s till. Privacy-minded governments, such as Germany and the Netherlands, want the highest safeguards against payment surveillance; while the Belgian government has made it clear that it will not support the digital euro if it can’t be used offline. Central bankers have long relied on lofty speeches and fireside chats to influence policymaking. But that hasn’t worked with the digital euro. And with Trump back in office, the ECB has been forced to climb down from its ivory tower and enter the political ring. All that presages a fierce political debate over the coming months — though the Parliament doesn’t plan to reach a final position until next May, meaning it’s unlikely you’ll be able to actually start buying things with digital euros until at least 2028.