“There is no denying Europe has a growth problem. Look at the numbers,” says Kaspar Loog, Group Product Manager, Payments at Bolt, as he discusses managing in this low-growth environment [EC Q325 figs project EU 2026 growth of 1.4%, then 1.5%]. The added complication of the Russia/Ukraine war abutting Europe’s borders is also pertinent, amid the wider geopolitically unstable situation in the world today.
“Europe pretends to be a single market. But isn’t,” says Loog, speaking from one of the continent’s more technologically advanced regions in Estonia, in the Open Banking and API friendly Baltics. The integration picture needs to change if it’s to avoid being squeezed by newly assertive powers like Russia, US or China.
Open Application Programming Interfaces encourage easier connectivity and data exchange, which can help the development of 21st century data-centric firms like Bolt, which are battling Uber and bring the independent growth Europe wants. Giving such firms payments autonomy would be beneficial in an era where sanctions, access, card network fees and so on are all issues in an ever more digital world that is ever more fragmented.
As Loog says: “In recent years we’ve ‘discovered’ that all our technology is either from the US (software) or China (hardware). This could be a problem.”
Just autonomously accessing the net; e-commerce, which relies on US-owned Visa and Mastercard network protocols; cloud storage; computing; cross-border payments processing; distributed ledger technology (DLT) ecosystems; and so on is an issue. Particularly, if the instability and weakening of NATO continues.
There aren’t enough PayPal, X, Amazon or other such European equivalents running on the crucial American-owned e-commerce underpinnings either. However, Europe is more advanced on its fast payment processing infrastructures (SCT Inst and latterly the Instant Payments Regulation (IPR) which is already here, plus the imminent digital euro).
The continent is okay at encouraging fintech-enabled newcomers. However, they often effectively need a license on a country-by-country basis due to poor implementation of EU integration ambitions, especially due to financial crime prevention rules, plus of course the EU lacks access to a true single capital market. This often prevents European fintechs or digital marketplaces accessing global growth scale-up money and the necessary funds.
The European Union (EU) needs to allow easier cross-border company licensing, harmonised rules and end country exceptions if more start-ups like Bolt are to successfully scale across the 440 million-strong economic zone.
The EU is strong in its chemical and car industries and its support for free trade and the rule of law, which all aid predictability vis-à-vis investment. Collectively, the EU is the world’s third largest economy. But it may struggle in the artificial intelligence (AI) and tech-led industries of the future, unless it gets its act together. Ditto on its ability to defend itself. More integration would also help the euro become a stronger global reserve currency.
“It’s like 30 different markets in Europe at the moment, including its affiliated EEA countries like Norway and Switzerland, each with their quirks,” says Bolt’s Loog. “That is the root cause of the problem. We need more federalism.”
Navigating a low growth, unstable world
According to Loog, speaking when the ownership of Greenland was causing transatlantic US tariff tensions: “The world is changing way too quickly. It’s impossible to tell what is the ‘best’ corporate treasury strategy. One simply needs to hedge all the bets, follow best practice for your company, and be prepared for anything and everything.”
François Masquelier, Chair of the European Association of Corporate Treasurers (EACT) trade body, agrees caution is advisable and advocates for “disciplined risk reduction”. He also encourages European treasurers to make “selective, strategic risk taking decisions that support investment and growth.”
Otherwise, we will never get out of the present European low-growth rut. But Masquelier does have some bulleted advice:
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Build resilient liquidity buffers.
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Use more flexible risk management tools.
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Strengthen operational resilience.
“Treasurers need to move beyond simple hoarding of cash and take this three-pronged approach,” he advises.
Europe fights back
Piero Cipollone, a member of the Executive Board at the European Central Bank outlined some initiatives designed to guide Europe’s fightback, such as the Pontes and Appia ECB projects, at the 48th Sibos trade show held Q425 in Frankfurt, Germany.
These wholesale central bank money settlement projects are respectively intended to synchronise DLT trading with the continent’s TARGET2-Securities (T2S) centralised settlement and to investigate the emerging DLT ecosystem for wholesale markets. The aim of Appia is to retain the pre-eminence and control of central bank money in a world where other digital currencies, assets, tokenised deposits, stablecoins and alternative DLT-based systems are emerging.
The Saving and Investment Union (SIU), due in 2028 as a successor to the failed EU Capital Markets Union, is another way to fix some of Europe’s structural problems. It’s intended to achieve a single capital market in the EU that is deeper and easier to tap. It’s simultaneously designed to encourage more pension funds and retail investor money to find its way into high growth areas, rather than sitting in savings. Revitalising the EU securitisation framework is also a key part of the plan to release the power of finance to incubate growth.
“The core idea of the SIU, which can fundamentally alter Europe’s growth, is to mobilise the €33trn+ in European savings currently held in low-yielding bank deposits and channel it into the real economy,” says Dirk Loscher, CEO of Clearstream Europe AG, the international central securities depository.
“For treasurers, this deepens the pool of capital and supports a more dynamic ecosystem for growth and innovation.” He describes the main initiatives to support European capital markets, such as moving to T+1 by 2027, and growth in other areas, as follows:
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Harmonisation of diverse regulation and laws: for example, regarding tax or insolvency and especially developing a ‘28th Regime’ for issuance. This is to make it easier for startups to scale cross-border across the 27 EU member states in a harmonised, transferable framework. Europe lacks social media platforms, digital markets and so on, but the economic zone is certainly big enough to support such innovative firms.
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Leveraging existing pan-European infrastructures better: like T2S settlement, the T2 RTGS, and other elements in the TARGET Services ecosystem, such as the TARGET Instant Payments Settlement (TIPS) platform. Payment autonomy is an issue in a world where real-time processing and data exchange is crucial, and where sanctions and access to card networks are key issues (see payments section).
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Broader adoption of digital assets: by modernising the existing EU frameworks (eg CSDR, EMIR) is essential “as other jurisdictions are already moving fast”, says Loscher.
Loscher expects all these collective proposals to bring more transparency, efficiency and technological innovation. Specifically in the post-trade processing arena, he says: “The Market Integration Package, published by the EC in December 2025 [and part of the SIU – Ed.], has turned the general momentum we’re seeing into an essential and concrete roadmap.”
The over-arching SIU is necessary because as the EC said in its December Market Integration Package announcement: “EU financial markets remain fragmented. In 2024 the market capitalisation of stock exchanges amounted to 73% of EU GDP v 270% in the US.”
Scattered capital markets
“Scattered capital markets lead to scattered non‑concentrated capital that isn’t targeted,” says Bolt’s Loog. “This means the French, for instance, cannot easily invest into Eastern Europe and vice versa, especially when you think of the remaining language, cultural and other barriers in Europe.”
“The crucial Draghi report, which provides the intellectual underpinning for the SIU, capital market integration package, securitisation and other initiatives in Europe could be great if it establishes a single market for everything, via its constituent parts,” adds Loog.
“But really, I think the most beneficial aspect will be the defence bonds inherent in the report. That will encourage a European military industrial complex. This historically helps innovation and finds business champions.
“Defence spending spills over into other innovations and wider economic and autonomy benefits.”
The centrepiece of Europe’s planned renaissance is the Draghi report. Published in 2024 this called for an additional €800bn per year to be spent on green finance, digital and defence investments to better protect Europe’s borders; spur innovation; and take action to find high growth by encouraging public and private investment; more centralisation of capital markets; and so on. Everything that is happening now was foreshadowed in the Draghi report.
“The work led by Mario Draghi, alongside that of Enrico Letta and others, has created the political momentum needed to move beyond incremental adjustments,” says Clearstream’s CEO, Loscher.
The Draghi report is specifically intended to release funds for 21st century incumbent tech firms like Bolt. This helps Europe remain technologically relevant as the world digitises. The drive, which includes the move towards a digital euro and an attendant natively owned ecosystem by 2029, could also deliver less reliance on US tech firms.
However, to achieve card scheme autonomy and a wider economic renaissance: “Europe has to stop focusing on its own belly button,” cautious Loog, as he calls on it to finally unify, overcome country-by-country arbitration and truly achieve the single capital, currency and consistently regulated market it aspires to. This must include a native payment infrastructure and ecosystem.
Scattered capital markets lead to scattered non‑concentrated capital that isn’t targeted. This means the French, for instance, cannot easily invest into Eastern Europe and vice versa, especially when you think of the remaining language, cultural and other barriers in Europe.
Kaspar Loog, Group Product Manager, Payments, Bolt
Digital euro
The planned 2029 development of the continent’s own central bank digital currency (CBDC) might provide a future standalone payments network and ecosystem in Europe. Its own champions can rely on this native platform. The digital euro’s service providers have already been appointed and a nascent ecosystem is being built via the ECB Pioneers programme and Innovation Service Platform (DESP v1).
The use of APIs to power easy connectivity and data exchange between the rail and users will no doubt help encourage an ecosystem build.
The Open Banking drive, evident in the EU PSD2 regulation onwards, is similarly powered by the trend towards open API usage and its ability to aid connectivity, new entrants and data sharing in the service of digitalisation. It’s another potential incubator of European-specific firms.
“The digital euro is supported by a European regulation currently under discussion to make it legal tender. This will help the autonomy [and fees] aspect,” explains an ECB spokesperson, when discussing the drive for a renaissance. “It provides an open standard for digital payments that is accessible to all, free for basic use, and that will help spur an autonomous digital ecosystem.”
It is too early to say yet if it will succeed because it depends on merchant uptake in the retail arena. However, Loog doesn’t rate the CBDC option: “As conceptually I believe the aims for it go against the basic tenets of the underlying blockchain technology. Digital crypto-based currencies are popular because they have three things going for them:
“The digital euro – or indeed any CBDC – doesn’t improve on any of those benefits, indeed quite the opposite,” adds Loog, while asserting that it’s a solution to a problem that doesn’t exist.
“Stablecoins are proving to be much more popular anyway because they are a solution to a practical treasury problem – namely, cross-border and institutional payments involving foreign exchange (FX). The digital euro is too retail focused to be useful.”
That may be true for multinational corporate (MNC) treasurers, but it could be helpful domestically, regionally or in the retail space for some, although Loog is clear he would prefer Open Banking and API linkages to take off instead, as opposed to the still conceptual and therefore slower-to-market retail CBDC alternative.
There are also wholesale elements to the digital euro programme. According to Clearstream’s Loscher: “The adoption of a widely accepted wholesale (w)CBDC in the EU is central to the digitisation of financial markets.” Treasurers should be aware of this, as well as looking at the retail elements of the project.
Future retail payments
It could be argued the publicly backed digital euro retail ecosystem stands a better chance of success than the private sector Wero alternative. This European Payments Initiative (EPI) project, led by 16 banks, aims to create a unified European payment solution to handle person-to-person, online e-commerce, and point-of-sale cross-border transactions, initially in France, Germany and Belgium, which isn’t reliant on Visa or Mastercard.
Instead, the nascent digital wallet relies on Open Banking and APIs under the PSD2 regulation to connect with, authenticate and initiate payments from users’ bank accounts. It’s a pan-European account-to-account (A2A) payment solution in-line with Loog’s wishes.
However, Wero would have to convince every European merchant to convert to them as it seeks to spread across the continent. This will be difficult, especially as Open Banking hasn’t truly gained widescale adoption. If it cannot, then Wero would have to pay a fee to run the Visa/Mastercard protocol cross-border to get reach, thereby diminishing the autonomy, cost competitiveness and API-centric approach.
Conversely, merchants might update to the digital euro wallet and associated ecosystem in-store, online and everywhere else because its standard is multi government-backed. It will be central bank-backed legal tender money, aiding scale.
The dynamics of if public or private alternatives will win volume will be decided by merchants. Both Wero and/or a digital euro retail ecosystem would be useful in giving Europe its own standard and payments network for its own digital champions and merchants to link to, for their own payments processing.
“Thirteen out of 21 eurozone countries currently have no direct alternative to Visa or Mastercard. This means no independent network access, no autonomous e-commerce, or say over fees,” says an ECB spokesperson.
Wero
When considering the likelihood of the EPI’s Wero digital wallet making inroads into the European marketplace, Loog asserts: “I’m a payments guy, not a fortune teller. But it has a chance because existing card network fees are high and the monopolistic behaviours of existing [US] incumbents, with their nigh-on 50% profit-to-revenue ratios, plus the recent demand for mandatory use of tokens and an exception fee if you don’t use them, have alienated merchants.”
It will be hard to displace them, but Wero can if more of Europe’s banks back it. “The 0.2 cent transaction and clearing costs of the SEPA Instant Credit Transfer (SCT Inst) scheme that allows euro transfers in under ten seconds, and latterly the IPR, provides a low-fee economic baseline and infrastructure for the project,” adds Loog. “The 16 banks’ presently backing Wero bring established customer bases, fast volume and extensive capabilities. This could kickstart a potentially achievable API-centric alternative network. I’m monitoring Wero with interest.”
However, Loog does see some potential problems:
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Variable Recurring Payments (VRP) chargebacks and consumer protection.
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The cost of ‘card’ iterations [if that extension happens – Ed.].
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Actual transaction price setting.
It will also be hard to match the great customer experience of Apple or Google Pay on the front-end – and it’s CX that wins consumer uptake.
“International consumer payments are a consolidation and economies-of-scale game dictated by large global players like Amex and Mastercard, who are often linked to by other digital giants like ApplePay, which rely on them to do the back-end processing, while they do the interface and security,” explains Loog. “Europe doesn’t have anything like that, or indeed like China’s WeChat Pay mobile and digital wallet service. If Europe is going to compete then it needs to get to the same scale. Perhaps the EPI’s Wero will provide this?”
Payments: IPR
“The Instant Payments Regulation has at least removed the arbitrary AML country-specific rules and imposed a mandatory ability to move money fast across EU borders. There is no screening at the time of payment,” says Loog, as he looks for some positives from a corporate treasury perspective.
However, there are still pre-Verification of Payee (VOP) concerns for processors earlier in the chain and corporates can opt-out of the IPR VOP stipulations for now on bulk payments – not single payments, which are mandatory.
Regulation
Excessive regulation has been a source of complaint in and outside of the EU for years. “I’m with Steve Jobs on this,” says Loog, “who famously said ‘less is more’ when it comes to tech regulation and advocated for letting the market run.”
Loog isn’t impressed about “the mess” Europe has made of Open Banking either – Baltics aside, and to a lesser extent the UK – where he points towards the remaining high friction between A2A transfers as problematic. “Initial first-time payment conversion rates of 60-80% are a clear failure in adoption,” he believes. “I cannot work with that. As a merchant I need almost 100%.
“The Baltics is the only EU region where the consumer online checkout is dominated by Open Banking players using bank details, rather than card scheme-backed players.”
Conclusions
Despite the low-growth precarious nature of Europe’s economy, there are reasons for optimism, believes Clearstream’s Loscher, citing: “A renewed political will that offers a crucial window of opportunity to enact game-changing reforms.
“The transformation of the CMU into SIU is the cornerstone of this fightback. The aim of the plan is to mobilise private capital [and public, via Draghi] as the key leverage for success. Modernising existing regulatory frameworks also makes them fit for the future.
“If we commit to this path, we can create a competitive ecosystem that closes the gap and repowers sustainable European growth for the 21st century.”
