in any aspect in order to preside potential risks. we must be vigilant and we have to understand and preside all potential risks of issuing a digital euro. 2. challenges central banks are largely sailing into unchartered waters, with new territories to explore when designing a cbdc. to map out the best way forward, as central bankers, we would face many challenges associated with the design of a cbdc. i would now focus on this aspect by sharing the experience gained in participating in the activities of the investigation phase of the digital euro project. i will also mention the interconnections between the various aspects of this complex project. we can bring the challenges together in four main areas : i. the economic of cbdc ; ii. the legal issues ; iii. the technological issues given the fast innovation in this sector ( eg dlt ) and the associated security risks ; iv. the organizational issues and the impact on the internal structure of central banks. i. the economic of cbdc the main focus here is on the adoption rate of digital euro. a too high large adoption rate might endanger the financial stability ; a too low adoption rate might be insufficient to maintain the central bank footprint in the economy. thus the challenges of the economic of cbdc require a ) the analysis the potential impact on the role of supervised financial intermediaries and on the transmission of monetary policy and financial stability and b ) the ability to meet the end - user needs including privacy issues and the integration with existing retail payment schemes / systems ; the introduction of a cbdc can influence the transmission of monetary policy and financial stability through several channels that are mainly related to the substitution of commercial bank deposits with a public digital currency. in the euro area, as in all modern economies, banks grant loans and issue deposits, thereby performing maturity and liquidity transformation services that improve the allocation of households ’ consumption across time and firms ’ capital across productive activities. these activities are essential for the well - functioning of the economy and are key components of the transmission of monetary policy and the stability of the financial system. if households and firms were to substitute a large share of their deposits with the digital euro, or they were to use the digital euro as a safe heaven in time of stress, banks would need to replace a some of their stable funding and lose customer information that are essential to perform their activities. the eurosystem ’ s ability to support the economy through the banking system may be weakened, with broad macroeconomic

while things might change – they always do – we will continue to act in a way that ensures stable inflation over the medium term while still providing what support we can to jobs and economic activity. thank you. all speeches are available online at www. bankofengland. co. uk / speeches references beaudry, p. and portier, f. ( 2006 ), ‘ stock prices, news, and economic fluctuations ’, american economic review, vol. 96, no. 4. broadbent, b. ( 2012 ), ‘ productivity and the allocation of resources ’, speech given at durham business school, available at http : / / www. bankofengland. co. uk / archive / documents / historicpubs / speeches / 2012 / speech599. pdf broadbent, b. ( 2017 ), ‘ brexit and the pound ’, speech given at imperial college, available at http : / / www. bankofengland. co. uk / publications / documents / speeches / 2017 / speech969. pdf. carroll, c. ( 2001 ), “ a theory of the consumption function, with and without liquidity constraints ”, journal of economic perspectives, vol. 15, no. 3. deaton, a. ( 1992 ), understanding consumption, oxford university press, oxford. di pace, f., king, p. and theodoridis k. ( 2017 ), ‘ assessing the effects of supple side news in a dsge model estimated for the uk ’, mimeo. kamber, g., theodoridis, k. and thoenissen, c. ( 2017 ), ‘ news - driven business cycles in small open economies, journal of international economics, vol. 105. kurmann, a. and otrok, c. ( 2013 ), ‘ news shocks and the slope of the term structure of interest rates ’, american economic review, vol. 103, no. 6. all speeches are available online at www. bankofengland. co. uk / speeches