The geopolitics of digitalization: Digital and monetary sovereignty in Europe
The report The Geopolitics of the Digital Revolution: Europe’s Defining Test, authored by Miguel Otero Iglesias and Gonzalo Rodríguez Gordo for the Center for the Governance of Change (IE University), examines how the digital revolution has evolved from a purely economic phenomenon into a central arena of geopolitical competition. The study argues that technologies such as artificial intelligence, semiconductors, cloud computing, data, and digital payment systems have become strategic infrastructure through which power is exercised, dependencies are created, and influence is projected. Against this backdrop, the European Union faces a decisive test: moving from a primarily regulatory power to becoming a material power capable of sustaining its digital sovereignty and social model.
Key insights:
- From regulation to material power: The EU has led global digital governance through landmark instruments such as the GDPR, the DSA, the DMA and the AI Act. However, the report warns that regulatory authority is insufficient unless it is matched by indigenous technological capabilities across critical layers of the technology stack (chips, cloud, data, AI and payments).
- A data economy that rewards scale: The transition toward generative AI and “machine knowledge capital” reinforces the structural advantages of the United States and China. Europe risks falling behind unless it enables firms to scale and supports the consolidation of European champions.
- Monetary sovereignty in the digital age: The growing interconnection between finance and digital technologies reinforces the need to strengthen Europe’s monetary and financial architecture. Deepening and integrating financial markets will enable the euro to achieve greater global weight. This will require the development of genuine European safe assets, resilient and interoperable payment systems, the completion of the banking union, and deeper and more integrated capital markets. It will also entail embracing the technologies and capabilities embedded in new forms of money, both public and private (digital euro and stablecoins), as part of a broader strategy to enhance financial resilience, innovation capacity, and strategic autonomy in an increasingly weaponized global financial system.
- Risk of structural subordination: Without a comprehensive strategy that combines regulation, investment, public-private coordination and international partnerships, Europe risks becoming a self-regulated space that remains structurally dependent on external digital and financial ecosystems that are vulnerable to both pressure from the US and critical technological chokepoints controlled by China.
- The social contract: The report concludes that digital sovereignty does not imply technological autarky, but rather the capacity to make autonomous decisions that align with European values. The central challenge is not only to compete in the digital economy, but to ensure that technological transformation remains compatible with social cohesion, democratic legitimacy and Europe’s long-term strategic resilience.
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