r/Economics • u/Majano57 • 1d ago
News 'March to independence': Christine Lagarde wants EU to ditch Visa, Mastercard for own platform
https://www.businesstoday.in/world/us/story/march-to-independence-christine-lagarde-wants-eu-to-ditch-visa-mastercard-for-own-platform-470816-2025-04-05283
u/UntdHealthExecRedux 1d ago
This is going to be the biggest long term consequence of "liberation day". The US stock market has been driven largely by these large multi-nationals who do a lot, if not most of their business overseas. Other countries tolerated it in part because it gave them continued access to the US market. Well if that access has been taken away, and not only taken away but taken away so abruptly and haphazardly and as a massive spurn to our allies then they are going to increasingly do this. Trump killed the 7% annual gains on the S&P 500
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u/ChrisFromLongIsland 1d ago
40% of the SP 500 revenues come from overseas.
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u/fumar 1d ago
That makes me think we're nowhere near the bottom. Obviously it's not going to go to 0 foreign revenue but it could easily be halved in the next few years.
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u/cumblaster2000-yes 20h ago
no where near...
not even close.
say good bye to the five.year gains...
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u/prisukamas 23h ago
Oh please spare me this BS. Anyone remember the not-so-distant EPI? Need a reminder? https://www.paymentscardsandmobile.com/european-payments-initiative-hits-troubles-as-majority-of-banks-leave/ It failed miserably without even taking off. I’m from Europe and would very much like this sort of thing to succeed but it’s just not happening in fractured state that Europe iS
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u/dr_tardyhands 23h ago
But it's a different situation now. There seems to be a real scramble to detach from wherever US is going.
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u/prisukamas 22h ago
It is on paper and emotions are running high. Trump will kick in global recession and things like these will be left for “better times”. Once the economy starts spinning down and unemployment rate kicks up, the populist parties won’t spend anything on high-tech. At best we’ll see investment pledge to infrastructure as we now see in Germany, at worst it will be just survival of the fittest
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u/Beethoven81 20h ago
Imagine visa us or master card have a technical glitch and payments in Europe are suspended. Run on the banks.
Imagine us banks receiving payments everyday from eu banks for Mc visa settlements are under stress and can't accept those payments for whatever reason (that's what happened to Russia...), European card holders are cut off, they rush to the banks to withdraw, we know what happens next.
This is national security issue.
Same as Ukraine and Russia have their own payment networks that do not depend on anyone else outside of the country...
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u/throwaway00119 22h ago
This is insanely ignorant and you’re still pretending that nothing has changed. Just a simple recession.
Reality is that all of these countries will realize that the US is no longer their rock and even when emotions calm and we’re on the backside of whatever is to come, these relationships have been irrevocably harmed. I’m not a doomer and saying the sky is falling, but if you truly believe nothing will change you’re in for a rude awakening.
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u/prisukamas 21h ago
https://www.reuters.com/world/us/trump-tariff-gamble-brings-political-risk-2025-04-03/
“He (Trump) has a high tolerance for pain, but it could turn into real pain at the ballot box (in) November 2026”
My bet is that he will fold due to elections, therefore my thinking that this is just “another recession” - albeit it will be a hard one. But there won’t be any tectonic shifts in Europe tech. We will have even more shift to the hard right though, with populist taking over more and more
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u/gluedtothefloor 20h ago
It doesn't even matter if he folds now. Hes kicked this into gear and the rest of the world is realizing it absolutely cannot rely on the US for anything and should try to divest as much as possible. The harm is irreparable and the most we can hope for is limiting it now, but my money is on Trump doubling down.
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u/thehourglasses 19h ago
This is operating under the assumption that fair elections will be allowed in the future — there is no guarantee.
Trump continues to consolidate power because naive folks like yourself keep thinking he will act rationally, sanely, and adhere to norms despite him giving you every opportunity to realize the opposite. Stop it.
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u/dr_tardyhands 19h ago
I could be wrong, of course, but I don't think he cares about any ballot boxes anymore. He can't legally run anymore and couldn't care less about how the GOP does after him. Either he'll make a grab at his third (and more) terms or he'll leave office peacefully.
What has fundamentally changed is that the world watched Americans invote him not just once but twice. Once could be an accident. But 2/3 is definitely not. The people who wanted this are not going away, even if Trump were to die tomorrow.
Living with those odds is like trying to build a long-term relationship with a rabid pitbull! Maybe sometimes the dog is in a good mood, but you just can not plan your life around those moments.
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u/dr_tardyhands 19h ago
Government spending does affect these things (despite what the valley boys seem to think) but on a much longer time scale. Too long of a timescale for this. So, government policies could (and should) make the tech company environment as attractive as they possibly can in Europe, but other than that, it'll have to be the private sector (and possibly open source community? But that's a bit of a longshot) that steps up.
Europe does a good job spinnng up tech companies, but they tend to get bought out fairly early in their path by US money. There should be alternatives for that. If we're not doing free trade, then we're not doing free trade.
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u/lAljax 23h ago
I get the frustration, but things are changing a lot, the defenser spending alone gives me hope.
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u/prisukamas 22h ago
How are they changing if Italy and Spain are showing the middle finger https://www.kyivpost.com/post/49197 ? I totally get their logic, but to me it’s just the same stale-mate
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u/Apprehensive-Fun4181 1d ago
Now they're starting to think. Keep it up.
Remember all of banking should have been reforged into smaller pools of power after 2008. This did not happen and the current chaos is thanks to that.
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u/puppylish1028 6h ago
Can you elaborate on this? Why did 2008 mean that all of banking needed to be reforged into smaller pools? How has the (I assume, over centralisation?) of banking led to the current instability? Is it because it made the financial system more vulnerable to one player making big moves like trump has been with his tariffs?
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u/MrZwink 6h ago
It's not. It's a reaction to there media term coined in 2008 "too big to fail." It makes anyone uninformed easily jump to the conclusion that making banks smaller would be a solution. However The problem in 2008 wasn't that banks grew to large. It was that banks were securitizing unfairly. And when the dominos started falling, big banks that performed systemic tasks were also at risk. The systemic tasks were indispensable. those banks perfoming these systemic tasks were coincidentally big banks, that formed the backbone of the banking sector.
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u/Pjpjpjpjpj 2h ago
When one "bank" is so massive that its collapse means the entire system could collapse. Too many other banks and firms are tied to it so closely that its failure will have widespread repercussions. Then it is seen as "too big to fail."
So legislators will ensure it does not fail. That safeguard encourages riskier investment practices - thus privatizing profits and socializing failures. Massive, massive cost to taxpayers because the cost of allowing failure is perceived to be even higher. The cost of the 2008-2009 bailout was $498 billion (Emergency Economic Stabilization Act of 2008, Toxic Asset Relief Program, etc.).
Combine size with the ability for a basic bank (checking, savings, CDs, mortgages) to get involved with riskier activities (private equity, venture capital, derivatives like credit default swaps, currency futures, etc.), there is an increased chance for an event or combination of events to bring the bank down, having widespread repercussions on millions of Americans everyday checking or retirement accounts.
In response to 1929, the Glass Steagall Act of 1933 recognized this risk, and moved the country away from having one entity that does both commercial and investment banking services at the same time. In response to 2008, the Dodd-Frank Act with its Volcker Rule was passed in 2010, to again move the country away from these combined entities and also require safety testing of banks, encourage whistleblowers, eliminate proprietary trading, limit speculative trading, regulates derivatives (e.g. credit default swaps).
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u/PublicLogical5729 1d ago
Really hope Trump manages to lose the dollar as as the world's currency of choice, then manages to extend the term limit beyond 2 only to spend the rest of his life under President Obama
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u/Clear-Ask-6455 11h ago
Everyone hates the advantage of the dollar. $20 CAD is $14 American. It makes no sense to continue using American currency for other countries. Trump calls us free riders but we already pay more for American goods.
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u/Justthetip74 10h ago
It's only your own shitty governance that caused this. CAD has been higher than USD for like, what, 25 years (until 2020?)
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u/Clear-Ask-6455 10h ago
Well part of that is true. Americans have also played a part in this. They have been market dumping Canadians like crazy. American investors bought a lot of our real estate and that doesn’t help.
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u/Justthetip74 10h ago
Source?
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u/Clear-Ask-6455 10h ago edited 10h ago
The US already owns 49% of our share. If they import anymore they will have the majority of our market. Please tell me in what way is that fair?
The US has been blocking Canada for a decade from China. If we had access to China we would be a powerhouse.
Canada only owns 34.9% of Imports to the US. Talk about trade imbalance.
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u/iamhamilton 21h ago
This is the one redeeming quality about the advancements in blockchain and cryptocurrencies. The EU could create its own payment/credit provider without dealing with a massive overhead and give people the option to not have to use these scammy American credit card companies.
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u/oneWeek2024 13h ago
yes... because what you really want is an immutable blockchain of everyone's CC purchases.
when nothing about that is needed to run a merchant/CC processing company.
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u/doublesteakhead 3h ago
Stop trying to make blockchain happen
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u/xte2 3h ago
It's not or at least it seems not blockchain but a fork of GNU Taler https://www.ngi.eu/ngi-projects/ngi-taler/ which is a modern implementation of eCash (here a bit of theory https://youtu.be/DDsQCcuST6c and the specific one https://taler.net/papers/cbdc2021en.pdf from the original version).
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u/xte2 3h ago
Actually EU propose a fork of GNU Taler: https://www.ngi.eu/ngi-projects/ngi-taler/ so essentially eCash + http. As usual being "democracies" (in theory, non in substance of course) there is exactly ZERO public information of what the fork is but if it's close to GNU Taler as probably is that's makes NO PSP needed at all: people will get €alers from the ECB directly (or national banks part of the ECB federated network) and exchange them P2P, the paid part will deposit the €alers to get new re-enveloped to be spent in exchange (you can't spend them more than once).
The bad part of the game is that such payment system allow for a SINGLE payment operation, meaning the ECB will became the full owner of all electronic money, with full gridlock power.
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u/Wheream_I 15h ago
lol. Christine Lagarde, as is typical of politicians who have only surface level tangential understandings of things, has absolutely no clue the goliath undertaking she is suggesting.
From the advent of the credit card with the first diner’s cards to today, credit card processing and the credit card industry as a whole is an incredibly complicated ecosystem that has taken decades to create. To just “create a new VISA” (which doesn’t even make sense, because most of the interchange fees merchants pay come from the EVEN MORE complicated card networks, not card issuers like Visa) would take hundreds of billions of dollars and a decade+ to create.
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u/eljeanboul 8h ago
Christine Lagarde rose through the ranks to become the first female chairman of Baker & Mackenzie, then became minister of the economy of France, director of the IMF, and now director of the ECB. I disagree with her on politics but I would never even dream of suggesting she has a shallower understanding of international economics and financial systems than I do.
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u/Scary-Strawberry-504 6h ago
Appeal to authority. Just because she's a "good" politician does not make her right
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u/long5210 6h ago
Doesn’t matter if she’s right or wrong, it just matters now that the EU is looking at a different form of payment that would damage US companies. that’s the problem
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u/eljeanboul 6h ago
I didn't say anything about her being right, I just commented on a rando on reddit suggesting that someone who has decades of experience at the top levels of economics and finance, both in private companies and at the helm of the highest public financial institutions in the world, has a "surface level tangential understanding" of the situation (while they obviously know better).
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u/KoldPurchase 13h ago
Enter Wero.)
It's already up and running.
But it's not independent of America and its nowhere near as universally accepted as Visa and Mastercard.
And yes, it's politician talk.
If she went and said publicly that it's going to take a decade to decouple the rest of the world to decouple from the US, the markets would drop even faster than they are now.
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u/TeflonBoy 13h ago
Would the EU’s proposed digital currency also fit here, or is that something different?
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u/KoldPurchase 4h ago
It seems to be another payment option: https://www.ecb.europa.eu/euro/digital_euro/faqs/html/ecb.faq_digital_euro.en.html#q7
I don't know much about this one.
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u/blechie 7h ago
So can you pay with that at a tap-to-pay terminal or is it more like PayPal?
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u/KoldPurchase 4h ago
For now, it's the early stage, it's more like Paypal, but it ahould work in your phones for tap-to-pay.
No physical cards yet like Visa and Mastercard, if I read correctly.
It seems to work like InterAc over here. We can transfer from person to person (also to business) as well as tap-to-pay at merchants, with the physical card, or from a link on our phone.
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u/xte2 3h ago
You pay peer-to-peer but the "cash" exchanged (a cryptographical token) can't be exchanged further so you need to deposit it to the ECB to get a new one in return.
This allow self-custory of digital money but do not allow more than one exchange to be taxable since those who spend the money is not seen by anyone else but those who get it can only deposit them to get new-valid ones.
See https://www.ngi.eu/ngi-projects/ngi-taler/ and this CCC video on GNU Taler "original version" https://youtu.be/h6d0uXUE9hk it's similar to Mondex/Visa Cash of the '90s
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u/xte2 3h ago
It seems not to be a new Visa but a P2P system based on GNU Taler https://www.ngi.eu/ngi-projects/ngi-taler/ so actually you can only source money expendable only once from the ECB and you spent them P2P only. Those who get them need to deposit them since they can't be re-spent. The concept is the old eCash, an enveloped token you exchange consuming the envelop in the process.
One positive effect is that's the end for ALL PSP and one negative is that the ECB alone can gridlock the economy simply not releasing new talers anymore. And you can't reuse them so it's a dayily activity.
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u/Wild_Produce_2879 18h ago
From my anecdotal experience: trying to buy anime and CDrama merch from platforms that don't take Visa/Mastercard is already difficult and requires hoping that another platform will work with a US bank account or using a proxy service that adds additional fees.
This is in a very niche hobby. Should Europe succeed and their storefronts start refusing to take US Visa/Mastercard - or Visa/Mastercard deciding not to operate in Europe, also horrifying - on a much larger scale. Well. Americans are going to be beyond fucked.
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u/WanderingRobotStudio 1d ago
In my opinion, this is doublespeak. It's independence from a system that is independent from the EU. I'd expect they would like more monetary control over transactions than Visa and Mastercard give them because they are private companies, for better or for worse.
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u/Don_Camillo005 1d ago
becoming independent from a system you are depended upon is now double speak? this is more about having a fail save in place.
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u/WanderingRobotStudio 1d ago
Independence for whom? The people of the EU or the systems of the EU?
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u/Don_Camillo005 1d ago
the USA tech monopoly
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u/NinjaLanternShark 1d ago
It's not just the tech monopoly, it's that we've demonstrated our entire government can be weaponized against anyone at any time. Capitalism is at least predictable, not capricious.
I wouldn't want to be dependent on that either.
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u/WanderingRobotStudio 1d ago
Nope. The EU wants the independence to dictate the transactions of the people inside the EU. Independence to make more restrictions on the EU people.
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u/NinjaLanternShark 1d ago
dictate the transactions of the people inside the EU
What does this even mean? Who's trying to control people's transactions?
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u/WanderingRobotStudio 1d ago
What do you think "ditch for own platform" means? What do you think the EU's own platform would be compared to Visa or Mastercard?
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u/NinjaLanternShark 1d ago
In the current climate, Trump could decide Visa and Mastercard need to tack an extra 0.1% onto every transaction that takes place outside the US, or else, they can't do business in the US.
Illegal? Of course it is.
Would anyone stop him? No.
They want a payment network that can't be hijacked for political reasons, and I don't blame them.
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u/WanderingRobotStudio 1d ago
Surely the EU leadership would never hijack their own systems for political reasons.
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u/NinjaLanternShark 1d ago edited 1d ago
Your conspiracy theories are no match for what's happening right now.
The EU is far, far more business friendly than the US.
Edit: Also -- not for nothing, but thinking other countries are "just like the US" and "if it happened here this week it can happen there next week" is ignorance and denial in the extreme.
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u/yuxulu 1d ago
What the other guy stated is a looming fact that trump is completely capable of and is likely able to do though.
Them forcing bytedance to sell tiktok based on national security made it clear. Nothing stops trump from forcing visa/master to charge overseas transaction extra for national security too.
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u/pandabearak 1d ago
It literally means “we hate that our people and tourists have to pay 1-2% to some foreign company, we would like to have that money come to our companies instead”.
Why is this so hard to understand for you?
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u/Don_Camillo005 1d ago
so you are a conspiracy guy? do you also believe in the 4rth reich?
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u/WanderingRobotStudio 1d ago
Currently trying to ensure America's current leadership does not become such.
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u/Mistwalker007 1d ago
Mastercard was caught last year bullying manga repositories and shops in Japan for not complying with their morals, the Japanese gov had to intervene and threaten them to back off. If you think there's a risk of EU institutions abusing this power know that Mastercard is already brazenly doing that when and where it thinks it can get away with it.
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u/axlee 1d ago
Foreign private companies are "private" until whatever foreign government they report to decides them not to be. I can guarantee that, in the unlikely event of a US/EU war, the first thing the US would do would be to shut down Visa/mastercard/GPS/AWS/Azure/Gcloud/Cloudflare for Europe.
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u/goinupthegranby 1d ago
Or maybe they don't want their transactions subject to the monetary control of a foreign government who has recently proven to be unstable and toxic?
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u/xcsler_returns 19h ago
Yeah, this provides an opportunity for Lagarde and Carstens who have long wanted to introduce Central Bank Digital Currencies. It'll give them more control over monetary policy including 'more effective' negative interest rates that can't be avoided by users holding cash.
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u/interwebzdotnet 1d ago edited 1d ago
This is something that blockchain is focused on. Decentralized financial rails for anyone to use, free of political abuse and manipulation.
LINK and HBAR are two examples of blockchain projects not only capable of doing things like this, but also already been adopted and worked with by some of the world's biggest companies.
But, too many people here reactionary negative opinions about blockchain drive by many scams. These rwi projects are very well respected and reliable at this point though.
Edit, I love the ignorant downvotes. I mean LINK is literally working with one of the existing providers of financial transaction services, SWIFT.
For anyone who wants to learn instead of reactively downvote because "blockchain bad" directly from SWIFT regarding working with Chain Link.
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u/Don_Camillo005 1d ago
I love the ignorant downvotes.
crypto had 15 years to show what it can do. all it did was facilitate black market activity and be the tool for influencer scams.
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u/interwebzdotnet 1d ago
Yeah, like the internet was launched in 1991 and it took years to get traction.
Meanwhile do you actually believe that SWIFT is working with Link just for funsies because they want to tinker with old useless tech. You are missing the point if you actually believe your opinions over the facts right in front of you.
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u/Don_Camillo005 1d ago
• youtube started in 2005
• amazon started in 1994
• facebook 2004
• steam 2003where is the equivalent for crypto?
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u/interwebzdotnet 1d ago
It's not a science, so a 1:1 correlation isn't necessary.
Bitcoin
The blockchain projects I mentioned already such as LINK and HBAR
Coinbase
EDIT TO ADD:
- Prior administrations in the US actually sent letters to pressure existing financial institutes to not support crypto when they wanted to, effectively stagnating development of the technology.
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u/Don_Camillo005 1d ago
yeah duh, why would governments choose to tolerate such an energy intensive form of monetary transaction.
why did you choose to compare it to the fucking internet then? be smarter, pick fights you can win.
bitcoin is a tool, not a product. what can i do with it that i cant do already with money?
see point 2
see point 2
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u/interwebzdotnet 1d ago edited 1d ago
Yeah, duh because not all crypto is like that. Feel free to learn more, but HBAR for example is independently verified as a carbon-negative network, meaning it offsets more emissions than it produces.
Because I already won, you are just choosing to ignore the facts in front of you. Again, why is it that you know better than SWIFT who had nothing to do with blockchain until their partnership with ChainLink. What do you know that they are missing?
Bitcoin is the world's most secure, quick to send, non inflatable store of wealth there is. No inflation, no manipulation by a central authority, no printing more. Billions of dollars sit in pension funds, treasures, and 401ks, not to mention individual accounts.
Just because you want to ignore all of this doesn't mean it doesn't exist.
It's still in an early stage of development, again partly because for 4 if not 8 years, the US federal government actively tried to squash any adoption or growth. .
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u/Don_Camillo005 1d ago
Bitcoin is the world's most secure
kek, yeah sure thats why you cant cancel orders. at least i have the hope of getting my money money back when im being scammed through bank money, because its traceable.
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u/interwebzdotnet 23h ago
bank money, because its traceable.
LOL, you people who belittle and debate but who make it painfully obvious that you don't know what you are talking about are too funny.
EVERY single bitcoin transaction is traceable and public.
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u/DueceVoyeur 23h ago
EVERY single bitcoin transaction is traceable and public.
So, where are the indictment for the money laundering, human trafficking, drug trading that happens via Bitcoin if it is all traceable?
Crypto was created to bypass the traceability of financial transactions via governing banks that had to report suspicious transactions to their respective FINCIN
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u/Don_Camillo005 23h ago
yeah exactly, so whats the point of it?
ten years ago it was marketed as an anonymous coin. now its biggest appeal seems to be that its finite aka deflationary. which any central bank can do if they want to.fascinating technology, but not so for money.
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u/Loud_Guardian 11h ago
While Visa can process up to 24,000 transactions per second, Bitcoin can process only 7. Ethereum, Bitcoin's closest competitor, can handle 20 to 30.
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u/Loud_Guardian 11h ago
While Visa can process up to 24,000 transactions per second, Bitcoin can process only 7. Ethereum, can handle 20 to 30.
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u/interwebzdotnet 5h ago
Yes, and HBAR which is what I specifically called out handles 10,000 per second. Nobody was talking about btc or ETH in this scenario.
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