The everyday convenience of using a credit card in Europe may be underpinned by a surprising vulnerability: dependence on American financial infrastructure. An investigation by Italy’s Corriere della Sera reveals that two-thirds of card payments within the Eurozone are processed by U.S.-based companies Visa and Mastercard. This reliance, experts warn, gives Washington significant leverage – and the potential to disrupt the financial lives of individuals and institutions across the continent. The issue of European financial sovereignty is gaining traction as geopolitical tensions rise.
The extent of this dependence became starkly apparent in recent cases involving Francesca Albanese, a United Nations special rapporteur on Palestinian territories and five judges from the International Criminal Court. Both Albanese and the judges were targeted with sanctions by the Trump administration after issuing warrants related to Israeli Premier Benjamin Netanyahu. These sanctions effectively barred them from accessing services from U.S. Companies, resulting in blocked cards, frozen accounts, and an inability to conduct basic financial transactions like online payments or hotel bookings. This demonstrated, according to the Corriere della Sera report, how easily the U.S. Can “switch off” access to the global payment system.
The Dollar’s Grip on Global Finance
The core of the issue lies in the dominance of the U.S. Dollar in global finance. Currently, the dollar accounts for approximately 58% of global reserve currencies, compared to 20% held in euros. Roughly half of all international payments are conducted in U.S. Currency, with rates reaching 96% in the Americas, 74% in the Asia-Pacific region, and 79% elsewhere (excluding transactions within the Eurozone). This means any entity engaged in international trade requires access to a dollar-denominated account. Every dollar transaction, even those with no direct U.S. Connection, passes through the American banking system and falls under the purview of U.S. Authorities.
This system provides Washington with a unique level of visibility into global financial flows. Transaction details – amounts, senders, and recipients – become traceable, effectively turning the dollar into a tool of geopolitical influence. As former French President Valéry Giscard d’Estaing observed in the 1960s, this represents the “exorbitant privilege” afforded by the dollar’s status.
A Case Study: ABLV Bank
The potential consequences of losing access to the dollar system are not merely theoretical. In 2018, Latvia’s ABLV Bank faced collapse after being accused by the United States of complicity with North Korea. Even the threat of sanctions triggered a bank run, as depositors rushed to withdraw their funds, ultimately leading to the bank’s failure within days. This illustrates the fragility of European banks reliant on access to the dollar circuit.
The Search for Alternatives: The Euro Digital
Europe is actively seeking ways to reduce its dependence on U.S. Payment systems. One potential solution is the euro digital, a central bank digital currency (CBDC) intended to function as a digital equivalent of cash. The European Central Bank (ECB) hopes this will diminish the dominance of Visa and Mastercard. However, the Corriere della Sera investigation points out that transforming the euro into a viable global alternative requires further integration, including increased common debt, a unified capital market – as previously suggested by former Italian Prime Minister Enrico Letta – and greater political cohesion.
Without these fundamental changes, the report concludes, Washington will retain its ability to “pull the plug” on European credit cards and banks. The issue extends beyond mere convenience; it raises questions about the economic and political autonomy of the European Union in a rapidly shifting global landscape.
Photo cover: Dreamstime/Hai Huy Ton That
The debate over financial independence is likely to intensify as Europe navigates its relationship with the United States. The next key development to watch is the progress of the euro digital project within the European Parliament, with ongoing discussions expected to shape its final form and potential impact on the global financial system. Further updates on this initiative can be found on the European Central Bank’s official website.
Have your say: What steps should Europe take to reduce its financial dependence on the United States? Share your thoughts in the comments below.
