As part of the SREP, the national competent authorities assess the regulations, strategies and processes enacted by the institutions. They also evaluate the risks they are exposed to and their own funds and liquidity.

This article studies the impact of a digital euro on financial stability. Our survey findings indicate that German households are open to the digital euro – suggesting they perceive that there are benefits to accessing a central bank digital currency. However, demand for the digital euro raises concerns about strong outflows of deposits from the banking sector, with potential implications for financial stability. We study this issue in a new macroeconomic model and conclude that the digital euro – if complemented with an appropriate holding limit, i.e. the maximum digital euro amount that an individual is permitted to hold – can actually strengthen financial stability and improve welfare.

The continual observation of price stability is based on analyses of price statistics.