the cost of not issuing a digital euro speech by fabio panetta governor of banca d ’ italia cepr - ecb conference the macroeconomic implications of central bank digital currencies frankfurt am main, 23 november 2023 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. 1 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. 2 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. central banks around the world are preparing for this new digital era, recognising both the opportunities and the challenges it brings. they are actively exploring the potential this counterfactual approach was famously employed in the cecchini report, which made the case for the single market by assessing the ‘ cost of non - europe ’, defined as the untapped potential of the european internal market due to its incomplete integration. see cecchini, p., catinat, m., jacquemin, a. ( 1988 ). ‘ the benefits of a single market ’, wildwood house. ferguson, n. ( 2009 ), ‘ the ascent of money : a financial history of the world ’, 10th anniversary edition. of issuing a digital payment instrument alongside cash as a logical next step in the evolution of central bank money. according to a bis survey3, in 2022, out of a pool

new engagement strategy with mics based on the second pillar of the mandate : boosting prosperity. achieving this goal requires knowledge and practical solutions, which are somewhat scarce. the wbg should provide what these countries cannot find on the market. the knowledge bank should be an active knowledge manager able to mobilize its own expertise, know - how and information to provide tailored solutions to the specific problems of each single client. the development of a full scale business line of knowledge production and management is to be encouraged, provided that it is based on three principles : knowledge products need to be of the highest quality ; they have to respond to countries ’ needs and demands, rather than being supply driven ; they need to be provided on a cost recovery basis and contribute to sustaining the income generating capacity of the wbg. this market test would ensure that the knowledge products have value added for the mics. bis central bankers ’ speeches this strategy would free up enough ibrd lending capacity to meet the needs of the poorer members of the institution, without reducing revenues. however, the income generating capacity of wbg depends also on keeping costs under control. increasing the efficiency of the world bank through the current modernization process is of the upmost importance. in the medium term, it is necessary to reassess whether the current structure of wbg based on four organizations, ibrd, ida, ifc, miga, is still the best suited to serve the clients of the 21st century, or whether it is a legacy of the past that needs to be reorganized in a more efficient fashion. while searching for an answer, one can achieve valuable efficiency gains and cost savings by merging across institutions back office functions such as treasury, controller, risk management, human resources, information technology, general services, external relations, and unifying the country offices. making the most out of scarce resources by redesigning a very lean and efficient organization is a moral obligation to taxpayers and, more importantly, to the 1. 3 billion of poor people around the globe. bis central bankers ’ speeches