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ECB’s digital euro plan faces strong resistance from European banks

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The European Central Bank’s (ECB) plan to launch a digital euro by 2029 has encountered strong opposition from EU lawmakers and the European banking sector.

Ahead of a key European Parliament session on the project on Wednesday, 14 lenders, including Deutsche Bank, BNP Paribas, and ING, warned that the digital euro could undermine private sector payment systems.

The 14 banks have collaborated to create a private sector entity that will compete with US payment companies like Mastercard, Visa, and PayPal. The service, named Wero, was launched last year.

“The current design of a retail digital euro addresses largely the same use cases as private solutions, without offering clear added value to consumers,” the banks stated ahead of Wednesday’s session.

Fernando Navarrete, a Spanish conservative lawmaker appointed by the European Parliament to evaluate the digital euro, is also advocating for a significantly scaled-down version of the project.

The ECB began evaluating a digital central bank currency in 2020. Last week, its governing council decided to take the necessary steps to launch the first digital euros “in 2029,” with a pilot program in 2027.

The legislation underpinning the project was proposed by the European Commission in 2023. The project can only proceed if EU governments and the bloc’s parliament give it the green light, as current laws only authorize the ECB to issue physical cash, not digital tokens.

ECB executive board member Piero Cipollone argued in September that the digital euro is needed to protect “our freedom, our autonomy, and our security” due to the dramatic decline in cash usage and the dominance of US payment providers.

The share of cash used in stores fell from 72% to 52% in the five years leading up to 2024. The digital euro has gained impetus from the rapid development of US-backed stablecoins, which many in Europe believe could threaten the role of the euro.

Last month, the 20 finance ministers of the eurozone member states supported the ECB’s digital euro plans, welcoming the “recent progress in advancing the digital euro project” and urging lawmakers in Brussels to swiftly enact the necessary legal changes.

In a report published last week, Navarrete argued that the digital euro should only be used as a substitute for coins and banknotes in payments without an internet or mobile connection, but not as a real-time digital payment tool for other transactions, including online, as envisioned by the ECB.

Navarrete warns in his report that online payment functions could create a “parallel payment ecosystem that prevents private solutions from reaching a pan-European scale.”

He advocates for the online version of the digital euro to be launched only if European private sector competitors to US payment providers fail.

Navarrete told the Financial Times that the private sector is “closer than ever” to creating a competitive payment system, adding that “a responsible policymaker’s approach should be to set a framework to maximize the chances of this happening,” while also being “ready with a fallback option.”

It is unclear whether Navarrete’s views are shared by a majority in the parliament, as social democrats, liberals, and greens, as well as members of his own conservative group, support the digital euro.

His assessment was welcomed on Tuesday by the German Banking Industry Committee, the country’s largest banking lobby group.

The committee described the current plans as “too complex” and “too expensive,” stating that they offer “no tangible benefit for consumers.”

In a study commissioned by European banks, PwC estimated that the launch of the digital euro could cost the financial sector €30 billion.

The ECB rejected this estimate, stating the cost would be just under €6 billion.

“Twenty-five years after the introduction of the euro, there is still no pan-European competitive payment solution,” said a senior central bank official, adding that even the successful establishment of a domestic private sector entity to rival Visa and Mastercard would not be a permanent solution to the problems, as its ownership could change.

“Visa Europe used to be European, but it was eventually sold,” the central bank official said.

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France launches Defence Quantum Campus to accelerate military technology integration

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France has established a new Defence Quantum Campus designed to accelerate the adoption of quantum technologies across its military.

First announced in May and operational since June 1 in the suburbs of Paris, the campus serves as a centralized hub bringing together researchers, defense contractors, entrepreneurs, and investors.

“The core mission is to accelerate the operational deployment of quantum technologies within the armed forces,” Xavier Grison, General Armaments Engineer (IGA) and head of the campus, said in an interview with Euractiv.

Quantum technologies exploit the behavior of particles at atomic and subatomic scales, and are projected to transform fields ranging from computing and communications to sensing and navigation.

Defense-specific applications include post-quantum cryptography to secure communications against future quantum-enabled cyberattacks; advanced quantum sensors for GPS-independent navigation and enhanced detection; interception-resistant secure quantum communications; and quantum computing to rapidly simulate complex military scenarios, such as logistics, weapons systems performance, and weather forecasting.

The new campus operates with three primary objectives: strengthening ties with academic research, conducting in-house studies on defense-specific quantum use cases, and fostering closer relationships with industrial partners ranging from startups to major defense conglomerates.

A fourth pillar will focus on international cooperation.

France’s preferred partners in this technological domain will be countries within the European Union, which Grison described as the nation’s “natural circle of cooperation.”

Other nations, including Canada and Singapore, with which France already shares robust scientific and technological ties, will be evaluated on a case-by-case basis.

Grison noted that while the US remains an important partner, cooperation with Washington can prove more challenging.

“Preserving sovereignty and establishing a balanced partnership is more difficult,” Grison said, echoing broader European concerns regarding the maintenance of strategic autonomy in emerging technologies.

The campus will focus its efforts on three broad categories of quantum applications.

The most mature of these areas is quantum sensing, where systems are expected to significantly outperform conventional sensors.

“We have been working on this area for a very long time. We are confident that a portion of this research will yield concrete results,” Grison said.

Quantum computing represents the second major area of focus. While practical quantum computers capable of outperforming classical machines in useful tasks have yet to be proven, France maintains high expectations for the technology.

“We have identified five French companies utilizing five distinct technologies, all of which have a chance of success. The decision was made to mature all five. The goal is to reach a level of computational power by 2032 that surpasses even the most powerful conventional supercomputers.”

Grison identified quantum communication as the third category of focus for the campus, describing the field as currently being in a more “exploratory phase.”

Researchers hope that these systems will eventually overcome some of the physical limitations of traditional communication technologies, including those related to antenna usage.

For the Ministry of Armed Forces, the challenge lies not only in manufacturing hardware but also in developing software and identifying practical military applications.

Most of these potential applications will be dual-use in nature, offering utility to both the military and civilian sectors.

To help identify promising ideas, the campus has launched a “defense quantum hackathon” scheduled to take place in December.

A hackathon is an intensive innovation and coding marathon, typically lasting between 24 and 48 hours, in which software developers, designers, and subject-matter experts collaborate in teams to build innovative technical solutions to specific problems.

Participants in the event will receive training in quantum programming before being tasked with developing potential applications for the defense sector.

When asked what success would look like in ten years, Grison pointed to two key milestones: the emergence of a genuinely useful quantum computer and the deployment of an operational quantum sensor.

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EU states hold talks with Taliban in Brussels on Afghan returns

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Representatives from 15 European Union member states met with the Taliban in Brussels on June 23 to discuss the return of Afghan nationals to Afghanistan.

A European Commission spokesperson said on Tuesday that the meeting was co-chaired with Sweden. Belgium and the Netherlands also took part.

The Commission stressed that the discussions primarily focused on the return of Afghan citizens with criminal records or those considered security threats.

Talks covered a wide range of issues, including the identification of returnees, the issuance of travel documents and procedures related to their repatriation.

However, Johannes Luchner, a senior European Commission official who travelled to Kabul in January, had previously indicated that the scope could extend beyond convicted individuals.

Addressing European lawmakers at the end of January, he said: “Our primary concern is the return of criminals, but the number of non-criminal Afghans who have received return orders is also increasing.”

Another EU source has now expressed a similar view. Speaking to EUobserver on Tuesday ahead of the meeting, the source said the discussions would also cover the return of asylum seekers whose applications had been rejected.

Earlier in the day, the Commission declined to provide details about the meeting.

As a result, questions remained unanswered regarding who covered the Taliban delegation’s travel expenses, where the meeting would take place, whether women would participate and what the Taliban expected in return for assisting the EU with deportations of Afghan nationals.

The EU and its member states have not recognised the Taliban government since it returned to power five years ago.

Brussels defended its decision to maintain limited contacts with Afghanistan’s “de facto authorities,” arguing that such engagement is necessary to facilitate the deportation of rejected asylum seekers who have committed crimes or are considered dangerous.

A European Commission spokesperson said officials from the Commission and 15 EU member states attended the Brussels meeting, which followed a previous gathering held in Kabul in January.

“The Commission services and Sweden today co-chaired a technical-level meeting in Brussels together with technical-level representatives of Afghanistan’s de facto authorities responsible for return and readmission matters,” the spokesperson said.

A spokesperson for Afghanistan’s Foreign Ministry said the agenda was broader and included the possibility of a future consular presence in the EU, the resumption of consular services for Afghans living there and “the need for confidence-building measures.”

Spokesperson Abdul Qahar Balkhi added that the meeting raised hopes of creating “positive momentum to safeguard the consular rights of Afghans residing abroad.”

According to a European Commission letter addressed to Balkhi and reviewed by Reuters, the discussions would focus on “the return and readmission of Afghan nationals without a right to reside in the EU.”

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EU defence chief calls for integration of Ukraine’s military into European defence architecture

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The European Union’s Defence Commissioner, Andrius Kubilius, said the bloc should integrate Ukraine into a future European defence union, speaking at the European Defence and Security Summit in Brussels.

According to remarks reported by Reuters, Kubilius said: “It would be difficult to make sense of things if we did not regard the integration of Ukraine’s armed forces into our defence architecture in Europe as a vital issue.”

Kubilius stressed that Ukraine currently holds a dominant position on the battlefield thanks to the transformation of its military doctrine.

Calling for the integration of Europe’s defence industry and Ukraine’s manufacturing facilities into a single military structure, Kubilius said Ukraine should be fully integrated into the EU’s military market.

He added that the European Commission could present a detailed analysis of the defence market and initial proposals for next steps as early as next week.

At a later stage, the commissioner said, the Commission would propose changes to defence procurement rules and other market regulations.

Kubilius also outlined a strategic objective for the European Union.

He argued that EU member states should spend around €7 trillion on arms production over the next decade in order to surpass Russia in military strength and weapons stockpiles. According to Kubilius, such spending would be consistent with commitments under NATO to raise defence budgets to 5% of gross domestic product.

Urging Europeans to be prepared to bear the cost, Kubilius described it as “the price of peace.”

At the same time, he suggested moving away from the production of highly sophisticated weapons that are difficult to manufacture in large quantities. Instead, citing the example of drones used in Ukraine, he called for a focus on producing “enormous quantities of satisfactory weapons.”

The EU Defence Commissioner also underscored the need to integrate Ukraine’s innovative defence industry into Europe’s broader defence and technological base.

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