European Strategic Autonomy and the Cross-Border Payments Market in the Era of Deglobalization

European Strategic Autonomy and the Cross-Border Payments Market in the Era of Deglobalization

In our recent study, European Strategic Autonomy and the Cross-Border Payments Market in the Era of Deglobalization, commissioned by the European Parliament, we examine a largely underexplored vulnerability in the European Union’s (EU) financial architecture: the Union’s continued dependence on non-EU payment networks, most notably Visa and Mastercard. In a geopolitical environment increasingly characterized by deglobalization, sanctions, and the weaponization of economic interdependence, access to payment infrastructures can no longer be treated as a neutral or purely technical issue.

A substantial share of card-based payments within the EU continues to rely on infrastructures that are ultimately incorporated, governed, and regulated outside the Union. This structural dependence raises questions not only about competition and efficiency, but also about resilience, autonomy, and exposure to foreign political and legal pressures.

Payment systems as geopolitical instruments

The exclusion of Russian and Belarusian banks from global payment networks, particularly following the invasion of Ukraine in 2022, provides a powerful illustration of how payment infrastructures can function as instruments of geopolitical leverage. Acting under emergency powers and sanctions legislation, the United States (US) — coordinating with allies — was able to trigger the rapid disconnection of financial institutions from key payment rails. Private intermediaries, including global card schemes, implemented these measures almost immediately.

Our analysis underscores that the US retains both the legal capacity and, increasingly, the political disposition to use economic interdependencies as leverage. While we do not suggest that the EU could realistically be subjected to measures comparable to those imposed on Russia or Belarus, we highlight a more structural point: the legal and institutional architecture that made those measures possible does exist, and it operates also through payment networks on which EU banks remain heavily dependent.

US legal levers and asymmetric interdependence

The study analyses the legal tools through which US authorities could, in principle, influence — restrict, condition, or discourage — access to global payment infrastructures. These include executive powers exercised through the Office of Foreign Assets Control under the International Emergency Economic Powers Act 1977 and, outside the framework on emergency authorities, executive orders. Moreover, congressional legislation — in the style of the Countering America’s Adversaries Through Sanctions Act 2017 (CAATSA), which illustrates how Congress can convert foreign policy objectives into binding constraints on private actors — could also be deployed for these objectives. Even short of formal prohibitions, political signalling and enforcement risk can generate strong anticipatory compliance incentives. The experience of 2022 shows how legal prohibition, coupled with compliance risk and commercial prudence, led private intermediaries to cut or curtail services on a large scale. 

From the EU perspective, this creates a situation of asymmetric interdependence.

Deglobalization and the limits of soft law

These vulnerabilities are compounded by broader trends of deglobalization and the weakening of multilateral governance based on soft-law standards. Institutions such as the Basel Committee on Banking Supervision emerged in a period of expanding global cooperation and shared regulatory culture. Today, national political priorities increasingly constrain the adoption and implementation of internationally agreed standards, reducing their capacity to provide a stable and neutral framework for global finance.

As multilateral coordination becomes more fragile, reliance on foreign-controlled infrastructures becomes a more salient source of strategic risk.

Three pathways towards greater resilience

Against this background, we identify three complementary pathways to strengthen EU payment autonomy and resilience.

First, the digital euro represents a promising long-term solution. If widely adopted, it could provide a public, pan-European payment instrument that reduces reliance on private foreign card schemes and reinforces monetary sovereignty. However, its effectiveness depends on governance choices, user adoption, and ecosystem development — factors that make it a medium-to long-term project rather than an immediate fix.

Second, deeper cross-border banking consolidation is a necessary precondition for the emergence of European payment champions capable of competing with global incumbents. Yet, despite the Banking Union, the Capital Markets Union and, more recently, the Savings and Investments Union, legal, supervisory, and political fragmentation continues to inhibit the formation of truly pan-European banking groups.

Third, as a short-to medium-term risk-mitigation strategy, we argue that the EU should consider leveraging the extraterritorial reach of EU law. For some time now, the EU has increasingly relied on its market size and regulatory capacity to project its standards beyond its borders, particularly in areas such as data protection, sustainability, and digital as well as technology regulation. A similar approach could be applied to payment services, extending targeted obligations — such as non-discriminatory service provision and operational continuity — to non-EU payment providers with a significant operational footprint in the Single Market.

Such an approach would not eliminate dependence on foreign infrastructure, nor would it be immune to countermeasures by third countries. However, it could rebalance asymmetric interdependence by raising the legal and economic costs of politically motivated service disruptions, thereby strengthening the EU’s bargaining position and systemic resilience. For example, if a parent company were to instruct its subsidiary to shut down or restrict its EU operations in response to external pressures, it could expose itself to significant financial penalties, legal liabilities, and reputational damage in the EU.

Conclusion

The EU’s dependence on non-EU payment networks is not merely a technical issue, but a structural feature with legal and geopolitical implications. In a world where economic interdependence is increasingly weaponized, payment autonomy becomes a core component of financial sovereignty. While long-term solutions remain essential, the strategic use of EU regulatory power offers a pragmatic avenue to mitigate risks and enhance resilience in the interim.

The authors’ full paper can be found here.

Concetta Brescia Morra is a Full Professor at University of Roma Tre, Faculty of Law.

Raffaele Felicetti is an Assistant Professor (Tenure Track), LUISS Guido Carli University, and a Fellow in Corporate Governance & S.J.D. Candidate, Harvard Law School.