Macro · Focus Euro Area The first steps towards the digital euro

Key arguments

• Payment digitalisation, stablecoin growth and DLT spread challenge monetary sovereignty and European financial infrastructure.
• The retail digital euro, together with Pontes and Appia, aims to keep central bank money functional in the digital economy.
• Balance limits and zero interest aim to prevent disintermediation and preserve bank deposit competitiveness.
• Effects on the bank credit channel are ambiguous, as deposit outflows could raise funding and lending costs.

Corresponding source evidence

1. Through the Pontes and Appia projects and the development of the retail digital euro, the Eurosystem aims to ensure that central bank money continues to fulfil its role in the digital economy, while supporting the integration and efficiency of European financial markets 1.
2. Origins and nature of the project The context The debate surrounding the introduction of a central bank digital currency (CBDC) in the euro area has emerged as a structural response to the rapid digitalisation of payment systems and the gradual decline in the use of cash in everyday transactions.
3. A powerful catalyst that accelerated the inclusion of this issue in the agendas of international monetary authorities was the publication of the white paper on the Libra project by a consortium of companies led by Facebook in 2019 2. · 2019