to eu banks stability. in this context, we find that the risk outlook is crucially dependent on the timing and speed of the recovery in the eu economy. however, the outlook for growth in the eu also hinges on global recovery. developments in the us and possible military action against iraq are key external factors in terms of potential risks. adverse macroeconomic developments would impact quite strongly on eu banks ’ profits owing to a significant increase in provisioning needs and a reduction in income from traditional retail banking. nevertheless, we remain confident that the eu banking sector will continue to display a notable capacity to withstand any further shocks in the economic and financial market environment. given this situation, efficient banking supervision is of paramount importance. given the challenges posed to eu banks and potential cross - border implications, coordination among supervisors and central banks in the eu is essential. in particular, the bsc is taking due account of this necessity and providing a common forum. in this connection, it is worth mentioning that stability analyses and the monitoring of structural developments in the eu banking sectors form the core of the bsc ’ s work. thank you very much for your attention.

be made available to the public as a complement to cash, we would have to think the consequences through very carefully. there are various challenges to be addressed and i will name some of the key aspects : central banks and supervisors have to address the associated risks to financial stability and monetary policy. one important aspect to consider is the role that banks and other payment service providers play as intermediaries in the financial system. when discussing different design options for a cbdc, the effects on the balance sheets of commercial banks as well as the central banks need our full attention. an outflow of deposits from the banking sector must be avoided, as well as sudden, uncontrolled shifts of bank deposits to central banks ’ balance sheets. possible countermeasures could be, for example, maximum amounts or graduated interest rates, which could also result in negative interest rates above a certain level. but it should also be taken into account that acceptance of a cbdc could suffer if parameters were set without keeping an eye on the user experience. a cbdc expecting to gain widespread adoption has to be sufficiently scalable and secure. cybersecurity risks are one key aspect in this context. in order to ensure broad acceptance, we will have to make a cbdc accessible to all groups of society, without barriers, but in a secure way. in this respect, central banks face a balancing act between two opposite key risks : first, being too ambitious could lead to a crowding out of private payment solutions and a potential 2 / 5 bis central bankers'speeches disintermediation of the banking sector. second, creating an unattractive product would result in non - acceptance by consumers and enterprises. therefore, central banks aim to strike the balance : the level of adoption of a cbdc should neither be too high nor too low – an “ acceptance and adoption challenge ”. lastly, the effective prevention of money laundering and terrorist financing is on our list of challenges ahead. in the digital euro project, the eurosystem is moving forward swiftly but thoroughly to address these challenges. 4 the digital euro project in july 2021, the ecb governing council decided to set up a formal project on a digital euro. in the eurosystem, projects generally start with an “ investigation phase ”. experts from the ecb and the national central banks have been working together since october 2021 in an investigation phase that will last 24 months. at this stage, the focus lies on aspects such as : possible use cases involving consumers,