Fabio Panetta: The cost of not issuing a digital euro

Speech by Mr Fabio Panetta, Governor of the Bank of Italy, at the Centre for Economic Policy Research (CEPR) - European Central Bank (ECB) Conference "The macroeconomic implications of central bank digital currencies", Frankfurt am Main, 23 November 2023.

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

It is a pleasure to be with you today to discuss the implications of central bank digital currencies (CBDCs) from a macroeconomic and policy perspective.

I am sure there will be a lot of discussion at the conference about what we can expect if CBDCs are issued. So let me focus on the counterfactual – the consequences of not issuing CBDCs – using the digital euro as a case study. Therefore today I will highlight the costs of not issuing a digital euro.

Throughout history, monetary transformations have been the result of a dynamic interplay between technological progress, changing human preferences and institutional evolution.

In the early Renaissance, commerce and financial innovation flourished in the Italian city-states. The introduction of letters of exchange and correspondent banking freed merchants from the perils of transporting cumbersome gold and silver coins and promoted secure methods of payment which, in turn, facilitated international trade. The substantial wealth of the Italian city-states could then be used as the foundation for the splendour of the Italian Renaissance.

Today, we are once again at a pivotal point in the evolution of money. The economic landscape is changing in unprecedented ways. Digital innovation has ushered in a new age with the potential to unlock enormous opportunities. These changes inevitably affect payments and money, which are becoming as digital as our economies.