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.

TARGET2-Securities (T2S) is a platform for the centralised settlement of securities transactions within the European Union. T2S went live on 22 June 2015. In a short film, the Bundesbank explains how T2S works, its importance to the German market, and the role played by the Bundesbank.

Video of the entire press conference.