German Chancellor Pushes for Digital Euro Amid Currency Wars, Citing Export Threats
Дмитро Ковальський | Dmytro Kovalskyi
3 min read
German Chancellor Friedrich Merz has publicly urged the European Central Bank (ECB) to accelerate the launch of the digital euro. The reason: concerns over a strong euro against the U.S. dollar, which is hurting German and European exports. Merz believes the ECB’s digital currency will strengthen the euro’s global standing and reduce dependence on the dollar.
Currency wars have reached the highest political offices in Europe. German Chancellor Friedrich Merz directly linked economic challenges facing Europe’s leading economy to exchange rate fluctuations and sees a solution in an innovative financial instrument. His statement, according to analysts, is the strongest political signal yet in support of the digital euro project.
The Problem: A Strong Euro Hurts German Exports
Merz explained his position with simple economic logic: “When the euro strengthens against the dollar, it increases the price of German goods for foreign buyers.” As a result, European products lose competitiveness against American and other global goods.
“This exacerbates problems caused by international tensions and competition from China, putting additional strain on the German economy,”
the Chancellor stated.
He added that Germany’s heavy reliance on exports particularly impacts small and medium-sized businesses (SMBs), which find it difficult to hedge against currency risks.
The Solution: Digital Euro as a Sovereignty Tool
Merz and German Finance Minister Lars Klingbeil see an accelerated digital euro launch as the way out. They are confident the central bank digital currency (CBDC) will serve two key functions:
- It will promote the strengthening of the euro worldwide.
- It will reduce Europe’s need for the U.S. dollar in international settlements.
Merz believes the digital euro will help preserve the EU’s competitiveness in the global market and mitigate the negative impact of other countries’ currency volatility on Europe.
Timeline and Controversies: Balancing Privacy and Control
ECB President Christine Lagarde previously indicated that preparation for the launch would begin in October 2025, but everything depends on European legislators. The project walks a tightrope: on one hand, the digital euro must gain user trust and guarantee privacy. On the other, it must prevent money laundering and terrorist financing, requiring corresponding control mechanisms to be embedded in the legislation.
The Big Picture: The Fight for Payment Sovereignty
Merz’s call echoes a recent appeal by 68 economists to the European Parliament. They warned that delays with the digital euro could lead to the dominance of the EU’s payment system by American companies (Visa, Mastercard, PayPal) and dollar-pegged stablecoins. Thus, it’s not just about exchange rate competition but about strategic European payment sovereignty.
What This Means for Ukrainian Business
- A New Vector for European Integration. As Ukraine moves toward the EU, it must prepare for a financial environment where the digital euro could become a reality. This will require adaptation of IT systems and financial operations.
- Changing Currency Risks. If the digital euro truly strengthens the single currency’s position, it could affect EUR/USD exchange rates and, consequently, the terms of Ukrainian exports and imports.
- A Blueprint for the Hryvnia. The process of creating the digital euro is a unique case study that the National Bank of Ukraine can examine when assessing prospects for its own digital hryvnia (e-hryvnia) in the future.
This push from a key EU member underscores the shift of CBDCs from technological experiments to tools of geopolitical and economic strategy. For global investors and businesses trading with Europe, understanding this transition is key to navigating future financial landscapes and assessing the long-term role of the U.S. dollar in global trade.
The German initiative shows that central bank digital currencies are transforming from a technological experiment into an instrument of high geopolitics and economic competition. Ukrainian businesses and regulators should follow this process closely.
