– just like any form of payment – would have to respect the rules on countering money laundering, the financing of terrorism and tax evasion. this would enable public authorities to combat any illegal activity more effectively. to summarise, the digital euro would still be a euro, only in digital form. it would both shape and promote the digitalisation of payments, while reducing the associated risks. this would in turn support the ongoing digitalisation and modernisation of the european economy. 9 why might we need a digital euro? a digital euro would be critically important in a number of scenarios, which are analysed in our report. in particular, it would be needed in the event that citizens become reluctant to use cash as they go digital. this is not the situation we face today : cash is still the most common way of making retail payments in the euro area. however, its role as a payment instrument is diminishing – in some countries rapidly so – as consumers are increasingly paying electronically : 10 as a proportion of all physical retail payments, cash payments decreased from 79 % in 2016 to 73 % in 2019. this trend has accelerated during the pandemic – with a vast majority of consumers expecting to continue using digital payments as often as they do now, or even to use them more often in the future. 11 and because of this trend, we may see a further increase in the uptake of international card schemes and solutions such as payment wallets and apps developed by large technology firms. a digital euro would ensure that even in a situation where there is rapid digitalisation in the world of payments, sovereign money remains at the core of the european payment system. this would contribute to financial inclusion. it would also shield us from the risk that a private or public digital means of payment issued and controlled from outside the euro area could largely displace existing domestic means of payment. such a development would raise regulatory and financial stability concerns and could even put europe ’ s monetary and financial sovereignty at risk. how could a digital euro be introduced? legal considerations and possible challenges a digital euro would raise legal, technological and policy questions that we need to address. 2 / 4 bis central bankers'speeches let me start with the legal basis. today, only euro banknotes and coins are legal tender under eu primary law. this means they can be used to pay anywhere in the euro area. 12 therefore, a key issue discussed in the report is the importance for a digital euro to have legal tender status.

luis de guindos : improving macroeconomic stabilisation in the euro area remarks by luis de guindos, vice - president of the european central bank, at the global interdependence center central banking series conference, madrid, 3 october 2019. * * * introduction a decade after the global financial crisis, the level of economic activity in the euro area remains disappointingly low. it took nine years for real per capita gdp to surpass its 2007 level. likewise, euro area inflation has stubbornly remained below the ecb ’ s aim for much of the past decade. throughout this period, the ecb has acted decisively to support euro area demand and raise inflation onto a sustainable path towards our aim of below, but close to, 2 % over the medium term. this has included lowering the key ecb rates to record low levels and adopting a wide range of non - standard monetary policy measures. by contrast, the contribution from fiscal policy to macroeconomic stabilisation in the post - crisis period has been muted at best. from 2010 to 2012, economies representing around one - third of euro area gdp carried out procyclical fiscal tightening to restore confidence in their public debt, which significantly contributed to the second recession in that period. since then, fiscal policy has been broadly neutral. at our last meeting, the governing council responded to the continued shortfall of inflation with respect to our aim. recent economic data point to a more protracted weakness in the euro area economy. prominent downside risks remain and inflationary pressures are muted. we introduced a package of measures designed to support the euro area expansion, the ongoing build - up of domestic price pressures and, thus, the sustained convergence of inflation to our medium - term aim. we also noted the need for countries with fiscal space to act in a timely and effective manner and for all countries to reinforce their efforts to achieve a more growth - friendly composition of public finances. in my remarks today, i will focus on the roles of monetary and fiscal policy in supporting macroeconomic stabilisation in the euro area. in particular, i will explain why now is a particularly appropriate time for fiscal stimulus. i will also offer some thoughts on how to improve the current fiscal framework. macroeconomic stabilisation in a monetary union the literature on optimal currency areas points to the need to counter two types of shocks : those that are common to all countries, and asymmetric ones that affect a subset of countries. for common shocks, monetary