##e and what business options to offer intermediaries. for a digital euro to be designed and adopted successfully, it must be a collective endeavour. so we are stepping up our engagement with all stakeholders, from banks to payment companies, and from merchants to society at large. and at every stage of the project we will continue to engage with the european commission ( which recently launched a consultation on the digital euro ), the european parliament and the finance ministers of the euro area countries. defining the legal framework will entail reconciling trade - offs arising from several objectives, such as the right of individuals to confidentiality versus the public interest in maintaining the level of transparency required to combat illicit activities, or the benefits of allowing the digital euro to be widely used – also internationally – versus the need to safeguard financial intermediation and stability. but there are ways to resolve these trade - offs, as i have discussed in previous speeches. finally, at the end of 2023 we could decide to start a realisation phase to develop and test the appropriate technical solutions and business arrangements necessary to provide a digital euro. this phase could take three years. conclusion let me conclude. the complementarity of public and private money has guaranteed stability, competition and innovation for decades. the ongoing changes in technology, geopolitics and user preferences must not herald the demise of this careful balance, but rather a chance to extend its success to the digital age. central bank digital currencies will allow public money to continue to play its role in anchoring the stability of the payments system and contributing to its efficiency. and private money will add innovation and diversity to this foundation. the coexistence of public and private money can continue to be a win - win situation – perhaps even more so in the digital age. 1. a payment system based on technologies and practices designed, managed and supervised elsewhere would undermine authorities ’ ability to exercise their supervisory control. a situation in which the digitalisation of payments leads to most prices being quoted in a foreign or private unit of account would greatly reduce the central bank ’ s ability to influence monetary and financial conditions. 2. although many people are unaware of the differences between public and private money, they do know that banknotes protect them from a potential default by their bank. 3. the use of central bank money in payment systems puts the value of private money to the test every day by checking their convertibility into the defined unit of value, so preserving confidence in the currency 4.

remains modest. both monetary and credit growth continue to be supported by the historically low level of interest rates in the euro area and may also reflect the improvement in the economic environment over the last few quarters. given the continued strength of monetary growth, liquidity conditions remain ample in the euro area. the impact of this high level of liquidity on inflation over the medium term will depend on future developments in the economy and financial markets. should excess liquidity persist, it could lead to inflationary pressures over the medium term. to sum up, the economic analysis indicates that the main scenario for the outlook for price developments over the medium term is in line with price stability. cross - checking with the monetary analysis does not alter this view at the current juncture. as usual, i also wish to make a few remarks regarding other policies in the euro area. with regard to fiscal policies, the governing council sees increased reasons for concern. on the basis of the latest commission forecasts, the average euro area budgetary position is not expected to improve much this year or next. a growing number of countries are likely to report significant imbalances, while fiscal consolidation efforts might fall short of commitments. it is essential that all countries concerned undertake credible measures to address these concerns. such measures should be part of a comprehensive reform strategy. this would underpin the ongoing economic upswing by boosting confidence in sound public finances and by improving the prospects for future economic growth. the governing council welcomes the decision by the commission to request more consolidation efforts from a number of countries. turning to structural reforms, the governing council reaffirms its view that such reforms are essential if the euro area ’ s growth potential is to expand substantially. in particular, both our employment rate and our labour productivity growth need to increase significantly. following our discussions here in finland, let me stress that this requires a strengthened technological and scientific base and its application in the euro area as a whole, fostered by major efforts to enhance the human capital of our economy. in this context, we are particularly concerned that youth unemployment remains high in several countries. in order to achieve these goals, it is necessary to strengthen the implementation of structural reforms, both at the european and the national level. the lisbon agenda provides an excellent diagnosis of the problem and we have a good understanding of the measures needed to deal with it. we strongly support the ongoing reforms, which should be speeded up across the euro area. it is important to understand that everyone will be better