Fabio Panetta: Central bank digital currencies - a monetary anchor for digital innovation

Speech by Mr Fabio Panetta, Member of the Executive Board of the European Central Bank, at the Elcano Royal Institute, Madrid, 5 November 2021.

The views expressed in this speech are those of the speaker and not the view of the BIS.

The ongoing digitalisation of our economy is leading to far-reaching changes in many areas of our lives. Payments are no exception: innovative forms of private digital money are emerging in response to changing needs, which are transforming how we pay and the payment landscape more broadly.

These developments touch at the core of central banks' mandates as issuers of sovereign money. And central banks around the world are looking for ways to respond. The ECB is exploring whether to issue a digital euro – a digital form of central bank money for people and businesses to use in retail payments.

It has been argued that such a central bank digital currency (CBDC), if issued, would be redundant given the vast supply of private digital monies available, including bank deposits, credit cards, electronic money and mobile applications, and possible future payment solutions based on stablecoins.

Today, I would like to argue that, actually, monetary stability and the smooth functioning of payment systems ultimately depend on everyone being able to widely access and use sovereign money. And there is no reason why this should not hold true in the digital era. But this requires central banks to evolve alongside changing technologies, payment habits and financial ecosystems. Let me explain why.