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 Deutsche Bundesbank hosted its first International Conference on Payments and Settlement on 9 and 10 September 2015. About eighty researchers, central bank analysts and practitioners from all over the world joined the conference to discuss the most recent studies and to learn about developments, challenges, and risks for payments and settlement.

Deutsche Bundesbank, Conference Centre in Eltville am Rhein, 09.-10.09.2015