Nicola Bilotta, REMIT’s researcher from Maastricht University had a busy publishing summer, coming out with two pieces of content – a policy brief, and an article, both talking about the European Central Bank and it’s initiatives.
As Nico himself explains:
“I wrote these two articles around a common question: how is Europe responding to growing geopolitical pressures on the financial infrastructures it depends on?
This question has become more relevant as sanctions, geopolitical tensions and the growing role of dollar-based digital assets have made financial infrastructure increasingly strategic. For Europe, the challenge is particularly interesting: it needs to reduce vulnerabilities and strengthen its autonomy, while remaining deeply connected to the international financial system.
The two articles look at this from different angles.
The first asks how dependencies become vulnerabilities in the first place, and how the design of new infrastructures can respond differently to existing versus emerging dependencies. The digital euro, Pontes and Appia provide three useful examples of this.
The second focuses specifically on why the European Central Bank is pursuing two distinct wholesale CBDC projects simultaneously. I argue that Pontes and Appia can be understood as a form of strategic hedging: creating more options and reducing potential vulnerabilities while keeping Europe connected to the existing financial system.
So, while the two articles make different arguments, they are really part of the same broader story. They look at how infrastructure itself is becoming part of Europe’s response to a more geopolitical and fragmented financial system.
1. Full citation
Bilotta, N. “The weaponisation of interdependence and ECB infrastructure : the digital euro, Pontes and Appia”, EUI, RSC, Working Paper, 2026/06, Florence School of Banking and Finance
https://hdl.handle.net/1814/94977
Abstract
As geopolitical tensions have intensified concerns about payment infrastructure dependencies, the European Central Bank (ECB) has accelerated work on two parallel initiatives: a retail Central Bank Digital Currency (rCBDC), the digital euro; and a wholesale CBDC, the two-track Pontes and Appia projects. This article asks what factors account for the divergent institutional and technical design configurations of these projects and what this variation reveals about how weaponisable dependencies operate across domains and stages of consolidation. Drawing on Farrell and Newman’s Weaponisation of Interdependence (WI) framework, this study conducts a design-level examination of technical specifications, governance arrangements and procurement rules drawn from ECB documents, project reports and institutional publications. The article proceeds in two steps. First, applying Farrell and Newman’s three-condition test, it establishes that the EU retail and wholesale payment domains each satisfy all three conditions for weaponisation – network centrality, foreign jurisdictional control and high switching costs – but at different stages of dependency consolidation. Second, it extends the framework by applying it at the design level. It maps how the design features of the digital euro and Pontes-Appia correspond to these conditions. The findings show that the digital euro exhibits features consistent with addressing entrenched dependencies, while Pontes and Appia are configured to pre-empt prospective vulnerabilities associated with emerging dependency configurations. These findings demonstrate that the stage of dependency consolidation helps explain divergent infrastructure design configurations and they identify infrastructure design as a strategic tool to manage structural dependence.
2. Full citation
Bilotta, N. (2026). From Pontes to Appia, but not to an Agorá: strategic hedging and infrastructural geoeconomics in the ECB’s wCBDC initiative. New Political Economy, 1–21. https://doi.org/10.1080/13563467.2026.2737133
Abstract
The promotion of US dollar-denominated stablecoins under the Trump administration, together with the intensification of financial sanctions, has heightened the strategic dependencies embedded in existing wholesale financial infrastructures. Against this backdrop, the European Central Bank (ECB) has launched a dual-track wholesale central bank digital currency (wCBDC) initiative: Pontes, a near-term bridge between existing Eurosystem infrastructure and distributed ledger technology (DLT), and Appia, a longer-term, fully DLT-native architecture. Existing CBDC research has largely treated wCBDC design as a technical modernisation or focused on retail CBDCs and alternatives developed by rival powers. It has not yet explained why an advanced economy deeply embedded in the liberal financial order would develop two parallel infrastructures simultaneously. This article addresses that gap by bringing together infrastructural geoeconomics and strategic hedging theory. It develops a framework based on three observable mechanisms – risk recognition, functional redundancy, and international cooperation – and applies it to Pontes and Appia through qualitative analysis of ECB documents, technical reports, and eight semi-structured elite interviews conducted in 2025. The article argues that the ECB’s dual-track initiative is a form of strategic hedging: it builds redundancy to reduce European exposure to US-centric settlement infrastructure and dollar-denominated stablecoins while preserving the transatlantic relationship.