prefer to pay digitally and the only digital forms of money available to them are private ones. in such a world, central bank money would lose its key role in payments, and it would not be possible to ensure the complementarity and convertibility of public and private money. [ 6 ] the entire monetary and financial sector would be deprived of its anchor – central bank money – and would be exposed to potential instability. it is also conceivable that non - european digital payment solutions and technologies operated abroad might dominate our payments market, as we are already seeing in some segments like cards and online payments. this risk would be exacerbated by the expansion of means of payment offered by big techs, which could use their very large customer base to their advantage. this would raise questions about our autonomy and privacy in payments. it could even endanger european sovereignty. moreover, the international monetary system may see the emergence of central bank digital currencies ( cbdcs ) in large economies. such cbdcs would offer benefits in terms of efficiency, scalability, liquidity and safety that would support their attractiveness internationally. and they would have the potential to facilitate cross - border payments, which may enhance their role as a global payment unit. in such a context, not issuing a digital euro could undermine the international role of the euro and create additional risks to sovereignty. this scenario is not imminent, but it could potentially materialise in the future if we do not start acting today. and if we don ’ t act, we will also see increasing confusion about digital money. crypto - assets are a case in point. [ 10 ] unbacked crypto - assets, for example, cannot perform the functions of money. they are neither stable nor scalable. transactions are slow and costly. and, in some forms, they pose a danger to the environment and to other societal objectives. stablecoins, meanwhile, are vulnerable to runs, as we have recently seen with algorithmic stablecoins. in this context, it is vital that any remaining regulatory gaps in the crypto - asset ecosystem are closed. i count on the work of this parliament to ensure that an ambitious regulatory framework emerges from the current negotiations on the eu regulation on markets in crypto - assets ( mica ) [ 11 ] and on the current legislative proposals on anti - money laundering and countering the financing of terrorism, especially in relation to information accompanying transfers of funds and certain crypto - assets ( fc

states. 13. for a full overview of the effects on the monetary and financial system stemming from the introduction of a digital euro, see panetta, f. ( 2021 ), “ the present and future of money in the digital age ”, lecture at federcasse ’ s lectiones cooperativae, rome, 10 december. see also adalid, r, et al. ( 2022 ), “ central bank digital currency and bank intermediation ”, occasional paper series, no 293, ecb, may. the analyses presented in this paper look at different approaches for assessing the effects of a digital euro on euro area banks. 14. overnight retail ( household and non - financial corporation ) deposits make up around 40 % of euro area banks ’ total liabilities. retail deposits are the defining feature of commercial banks – the receiving of deposits and repayable funds is the first criterion of a credit institution in eu law. most retail deposits can be withdrawn overnight and are remunerated at very low short - term rates. nevertheless, in practice, they are a sticky or stable form of funding, unless there is a banking crisis. these features allow banks to offer loans with longer maturities and keep only a fraction of the face value of deposits created in this way in central bank “ reserves ”. this is the basis of fractional - reserve banking. 15. individual banks can respond to outflows in a number of ways in the short term, for instance by ( i ) using the bank ’ s existing central bank excess reserves that it holds on its balance sheet, thus reducing its holding of excess reserves ; ( ii ) acquiring reserves from other banks in the interbank market, by either selling assets or borrowing, which can be secured or unsecured and of different maturities ; and ( iii ) obtaining more reserves from the central bank by either selling assets or using them as collateral for secured borrowing. 16. an individual holding limit is the maximum amount of a retail cbdc that can be held by each end user. see the digital euro glossary. 17. a retail cbdc remuneration rate is an interest rate applicable to retail cbdc holdings. remuneration is considered tiered if interest rates applicable to holdings are differentiated across holding buckets defined using thresholds. see the digital euro glossary. 18. the design of a digital euro would likely include a combination of tools, even if not all are necessarily activated at the time of issuance. 19