. your successor has already been found, and probably everyone here in the audience knows him : axel weber. i am convinced that you, mr weber, will fill your new position as president of the cfs ( centre for financial studies ) just as ably and with much skill. your wealth of experience makes you just the right choice for the cfs ( centre for financial studies ), where you will be following in mr issing ’ s great footsteps. and you are already very familiar with the cfs, as you were its director from 1998 to 2002 and also maintained contact during your tenure as bundesbank president. welcome back, just a few metres away from your old “ stomping ground ” in frankfurt. welcome home, and here ’ s to a fruitful working relationship! i am looking forward to exchanging ideas with you. there is no shortage of topics for an exchange of views between the bundesbank and frankfurt ’ s research institutions. one of them is central bank digital currency ( cbdc ( central bank digital currency ) ), specifically the digital euro. i would like to talk about this in my speech today. there are three aspects which i wish to address. first, the opportunities and risks presented by the digital euro. second, the international dimensions of cbdc ( central bank digital currency ). many central banks across the globe are currently working on this issue. we should take this opportunity and try to make systems compatible across currency zones. and third, i will report on the current status of the digital euro project. the digital euro offers a whole range of opportunities. however, i will begin with the potential economic risks of introducing it. 2 risks and opportunities most of you certainly know what the “ digital euro ” project entails. the idea is to make a cbdc ( central bank digital currency ) available to individuals and businesses : like euro banknotes but in digital form. alongside cash issued by central banks and “ book money ” created by commercial banks, the digital euro would constitute an additional form of money. this would then be the third form of money in our current monetary system that consumers can use as a means of payment. the bank for international settlements ( bis ( bank of international settlement ) ) defines a monetary system as “ the set of institutions and arrangements that supports monetary exchange. it consists of money and payment systems. ” [ 1 ] what quickly emerges from this definition is that a monetary system is a complex entity with many interdependencies. the ability of

and data protection. the governance structure needs to be clarified – who is involved, who decides what? and finally, we shouldn ’ t endlessly put off making this kind of system operational. cbdc ( central bank digital currency ) could also offer a currency exchange solution by making processes automated, simplified and more transparent. this is another area of use for a wholesale variant of the digital euro, which is limited to a specific group of users. this group of users largely overlaps with institutions that currently already hold an account with the central bank ; in other words, they are primarily commercial banks. for example, it is conceivable for cross - border payments to be processed directly in various currencies as delivery - versus - payment transactions. even as we speak, there is a range of pilot projects [ 3 ] involving smart contracts and liquidity pools that promise significant advantages over traditional correspondent banking business. after this overview, you may share my views on the topic of the interoperability of central bank digital currency : namely that cbdc ( central bank digital currency ) presents a special opportunity to make international payments faster, more cost - effective and more transparent. the achievement of interoperability poses great economic, technical, legal and political challenges. once these can be overcome, the shortcomings of cross - border payments will decline significantly – something we should not leave to volatile crypto - assets or stablecoins in closed ecosystems alone. in this vein, it is all the more important to proceed with great care when conducting studies for a digital euro, and also to take international aspects into account. as i see it, we should exploit the opportunities presented by cbdc ( central bank digital currency ). it has great potential. 4 current project status in the eurosystem, we are currently working to establish how this potential can be harnessed. allow me to give you a brief insight into the current status of the project in the last part of my speech. the initial focus of the work is on using the digital euro within the euro area. should it come to fruition, a digital euro is intended to enable simple payments in everyday life – just like we ’ re familiar with when we use cash, but in digital form. it should therefore be usable in both retail outlets and when making purchases online. equally, it should be possible to use the digital euro for cashless payments from person to person or payments made between individuals and public authorities. in the eurosystem, we have identified two