Egypt and the EU have long had strong economic ties, supported by the EU-Egypt Association Agreement signed in 2004. The free trade pact eliminates tariffs on industrial and agricultural products, among other provisions. In 2010, both sides signed another deal that further facilitated the entry of agricultural, processed agricultural, and fisheries products into Europe.  

“In 2024, the EU was Egypt’s largest trading partner, accounting for 22% of Egypt’s total trade,” the EU Central Bank (ECB) said on its Egypt facts and figures webpage. “The EU was also the leading destination for Egyptian exports (26.5% of the total) and the largest source of Egyptian imports (19.9% of the total).” 

By 2029, however, trade flows may be disrupted, as the EU will allow its businesses to use a digital version of the fiat euro. That option will appeal to the EU and its vendors, as digital currencies offer economic, political, and business benefits.  

For Egypt to accommodate the digital euro, it needs a robust tech infrastructure, a legislative framework (as digital currency trading is currently illegal), and awareness campaigns.  

Sovereignty’s digital shield 

In November, Piero Cipollone, a member of the ECB’s Executive Board, said they “are making progress on both legislative and technical preparations [to launch a digital euro].” 

This step is essential, Cipollone stressed, as “Not having a digital form of cash puts [the EU’s] strategic autonomy at risk.” He noted that the bloc lacks a homegrown digital solution for day-to-day payments. “The euro area depends on the ‘kindness of strangers’ for retail digital transactions,” he said.   

As it stands, almost all digital payments worldwide must pass through the U.S. banking system, which controls fees and can unilaterally halt transactions. “Even … domestic card schemes that provide a European alternative … still rely on non-European card schemes for cross-border transactions,” Cipollone said.  

The “digital euro will be a European digital payment solution built on European infrastructure – all the providers we have selected are EU nationals controlled by EU nationals,” he said. “And it will ensure that the euro remains the single unit of account, protecting our monetary sovereignty.” 

Cross-border trade 2.0 

Across the world, more central banks are discussing issuing a digital currency alongside their fiat currencies. According to the Atlantic Council, a think tank, 137 central banks have launched or expressed interest in having, a central bank digital currency (CBDC). The most prominent is China, the world’s largest exporter and second-largest importer, which has been using the digital yuan since 2020 alongside the paper yuan.  

The advantages of CBDCs are undeniable. In conventional transactions, “the speed of settlement for cross-border payments varies from the same business day to five business days,” a World Economic Forum paper said. “Human interaction is often required in the process of verifying the sender and recipient’s information.” 

The speed at which banks process payments depends on variables such as the hours the sender and receiver work and whether they use the same infrastructure, such as SWIFT, for commercial banks. “For digital currencies that rely on decentralized ledgers, money could be sent and received within seconds and around the clock,” the WEF said. However, it warned that regulating CBDCs “may have an impact on the speed.”  

The second significant advantage of using CBDCs is they could more easily finance “SMEs that typically don’t have established financial records with banks,” noted the WEF. With digital currencies, including CBDCs, “public ledgers of digital currencies could be used to share payment and financial history to underwrite loans for import and export,” the research note stated. However, “strong privacy protocols would need to be enforced.” 

Thirdly, “digital currencies could alleviate the issues of de-risking … for countries [that] want to participate in global trade [by enabling] consumers and vendors [to] connect with international buyers and sellers … in compliance with [international standards] requirements.”  

Egypt’s legislative mindset 

Cryptocurrency trading is illegal in Egypt under a 2020 law that prohibits all unlicensed crypto activities, with violators facing imprisonment and fines up to EGP 10 million ($209,000). 

According to a 2025 note from Lightspark, a privately held cryptocurrency company based in Los Angeles, the legislation is phrased to “strictly prohibit most related activities,” including CBDCs.  

The Central Bank of Egypt has “not only refrained from issuing any licenses, but has also released multiple public warnings against dealing in digital currencies,” Lightspark said. 

Further solidifying this anti-digital money stance among individuals is a “non-binding religious decree from Dar al-Ifta [the state’s supreme religious authority], which declared cryptocurrency transactions forbidden under Islamic law,” Lightspark noted. 

However, the Financial Regulatory Authority (FRA), which oversees Egypt’s non-bank financial landscape, “is not currently involved in crypto oversight,” Lightspark said. It also has not explicitly stated its position on digital currency transactions. As such, Lightspark indicated, if Egypt were to legalize digital currency trading, it would likely start with the FRA. 

For now, Lightspark said, “Egypt’s strict prohibition on cryptocurrencies creates significant hurdles for businesses that use digital assets for international transactions,” as the only payment option is “traditional banking channels, which are often slower and more expensive for cross-border payments.” 

Eventually, this prohibition could “isolate the Egyptian market from global partners who prefer the efficiency of digital currency settlements, ultimately hindering trade and financial innovation,” Lightspark warned. 

Infrastructure  

An equally critical issue for adopting CBDCs and digital currencies in Egypt is infrastructure readiness. In addition to the country’s “legal and regulatory constraints,” the Bank of International Settlements (BIS) said the country’s banks aren’t designed to handle digital currency transactions. “If it is not suitably designed, the issuance of a CBDC may have major consequences in terms of financial stability,” the BIS said in a research note. “It may … lead to serious implications for banks’ core business.” 

Having a robust digital infrastructure is “another major challenge” facing central banks when promoting CBDC use. “Many possible difficulties could arise at the technical level, for example, relating to internet connectivity, especially in rural areas, interoperability with the existing systems or cyber attacks,” noted BIS. 

Financial literacy would be another challenge, according to the BIS paper. For Egypt, the religious spin Dar al-Ifta’s statement puts on digital currencies makes overcoming this issue even more difficult. 

CBDC-verse 

Eventually, CBE may have little choice but to allow local importers and exporters to use digital currencies when trading with the EU. According to a December Central Bank paper, “What was once a niche has become the norm. Harnessing technology to provide better financial services is now the name of the game.” 

However, central banks need to prioritize determining which types of CBDCs they need, as each has “potential benefits in acting as a catalyst for innovation and development of financial ecosystems,” noted the BIS. 

Retail CBDCs enable real-time peer-to-peer (online and offline) transactions with instantaneous settlement. Wholesale CBDCs “facilitate access for multiple financial institutions to a large-value payment system and support settlement for a digital financial market infrastructure,” the BIS noted. Lastly, CBDCs need to “facilitate direct cross-border monetary relationships with other CBDC networks to be established under the supervision of central banks.” 

Ultimately, continuing to outlaw and undermine the importance of digital currencies could destabilize the economy. “If central banks don’t issue digital money, they will lose their central role in money issuance and fail to provide an anchor of stability to the entire financial system,” said Egypt’s Central Bank. “Adapting to new technologies is not an option; it is an existential must.”