on 12 january 2021. the ecb will publish a comprehensive analysis of the public consultation in the spring. see ecb ( 2021 ), “ ecb digital euro consultation ends with record level of public feedback ”, press release, 13 january. 17. of course, the opposite risk also exists and would need to be taken into account to ensure that the digital euro would be seen as an attractive means of payment by end users. 18. brunnermeier, m. k. and niepelt, d. ( 2019 ), “ on the equivalence of private and public money ”, journal of monetary economics, vol. 106, pp. 27 - 41 ; committee on payments and market infrastructures – markets, march. 19. this may lead to collateral scarcity issues, which could potentially committee ( 2018 ), central bank digital currencies have an impact on market interest rates for safe assets, although the central bank could address this risk ( see the eurosystem ’ s report on a digital euro ). https : / / www. ecb. europa. eu / press / key / date / 2021 / html / ecb. sp210210 ~ a1665d3188. en. html 12 / 14 10 / 02 / 2021 evolution or revolution? the impact of a digital euro on the financial system ”, working papers, no 19 - 26, federal reserve bank of 20. keister, t. and sanches, d. ( 2019 ), “ should central banks issue digital currency? philadelphia ; assenmacher, k. et al. ( 2021 ), “ a unified framework for cbdc design : remuneration, collateral haircuts and quantity constraints ”, mimeo. 21. andolfatto, d. ( 2020 ), “ assessing the impact of central bank digital currency on private banks ”, the economic journal, september ; chiu, j. ”, staff working papers, no 2019 - 20, bank of et al. ( 2020 ), “ bank market power and central bank digital currency : theory and quantitative assessment canada, may. ”, staff working papers, no 22. see kumhof, m. and noone, c. ( 2018 ), “ central bank digital currencies — design principles and balance sheet implications 725, bank of england, may. ”, working paper series, no 2488, ecb, 23. ferrari, m. m., mehl

10 / 02 / 2021 evolution or revolution? the impact of a digital euro on the financial system speech evolution or revolution? the impact of a digital euro on the financial system speech by fabio panetta, member of the executive board of the ecb, at a bruegel online seminar frankfurt am main, 10 february 2021 throughout history, innovations in money have challenged and altered the structure of the financial system. time and time again, innovations have given rise to debates about the risks they pose and the rewards they bring, as well as the role of central banks in building confidence in money. paper banknotes are a case in point. as they were easy to carry, they made commerce more straightforward. but their success did not come easily. attempts by central banks to issue banknotes in the 17th century resulted in too many being issued and even defaults, raising questions about their effects on stability and, ultimately, on the credibility of the sovereign. yet modern banknotes eventually enhanced the benefits of central banking for society at large. similar debates emerged with the rise of bank deposits in the 19th century. advances in recording and communication technologies helped deposits become popular, consolidating the role of banks in money creation. but this also raised awareness that confidence in money depends on the stability of bank deposits, leading central banks to take on the role of lender of last resort. in today ’ s discussion on the digitalisation of payments, these debates sound familiar. some fear that digitalisation, if not properly governed, could crowd out cash over time, create instability and even threaten https : / / www. ecb. europa. eu / press / key / date / 2021 / html / ecb. sp210210 ~ a1665d3188. en. html 1 / 14 10 / 02 / 2021 evolution or revolution? the impact of a digital euro on the financial system monetary sovereignty. central banks are therefore considering whether they should innovate themselves, by offering sovereign money in digital form to the public at large. at the ecb we are considering whether to issue – alongside euro banknotes – a digital euro : a digital form of money that, just like cash and unlike other means of payment, would be a claim on the central bank instead of a claim on a private intermediary. but we must fully understand the economic, financial and societal implications of issuing a digital euro : we should consider how we can achieve the benefits while preserving the stability of the financial system and meeting