Fabio Panetta, a member of the Executive Board of the European Central Bank (ECB), delivered a speech at the Elcano Royal Institute in Madrid, discussing the importance of central bank digital currencies (CBDCs) in the digital era. Panetta highlighted that the ongoing digitalization of the economy is transforming the payment landscape, leading to the emergence of innovative forms of private digital money. However, he argued that central banks, as issuers of sovereign money, need to evolve alongside changing technologies and payment habits to maintain monetary stability and the smooth functioning of payment systems. Panetta emphasized that central bank money, as the only money with intrinsically guaranteed face value, plays a crucial role in maintaining confidence in private money and preserving the transmission of monetary policy. He noted that as the use of cash declines and digital payments become more prevalent, a digital euro would complement cash and ensure that central bank money remains a monetary anchor for the payments ecosystem. Panetta discussed the conditions for the success of a digital euro, including accessibility, usability, and a convincing value proposition for all stakeholders. He also highlighted the potential benefits of a digital euro, such as increased privacy in digital payments, mitigating the market power of dominant digital payment providers, and supporting the euro’s international use and Europe’s autonomy in global payments. Panetta concluded by emphasizing the essential role of central bank money in the payment system and the need for central banks to prepare for a digital future by issuing a digital euro that can readily be accessed and used by everyone.
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