Digital Euro, Monetary Objects, and Price Stability: A Legal Analysis

Corinne Zellweger-Gutknecht, Benjamin Geva and Seraina Neva Grünewald

Journal of Financial Regulation, 2021, vol. 7, issue 2, 284s-318

Abstract: The Eurosystem is mandated to safeguard price stability according to article 127 of the Treaty on the Functioning of the European Union (TFEU). Based on a theoretical and policy-oriented approach, this article sheds light on a second public good with enormous practical relevance both for financial markets and institutions as well as for the general public that the Eurosystem, and ultimately the European Central Bank (ECB), must safeguard according to article 128 TFEU: the availability of ideal monetary objects for the public. While monetary policy constitutes the instrument used to keep prices stable, the availability of ideal monetary objects is ensured through the issuance of ‘cash’ that serves as both money with selected properties and an anchor for other monies of the same currency, including sight deposits at commercial banks. Today, the role of ideal monetary objects is (still) primarily fulfilled by tangible banknotes. As the use of tangible banknotes declines, however, a digital equivalent and complement—a digital euro—becomes increasingly necessary. Accordingly, the article concludes that the ECB is both entitled and obliged de lege lata to issue a digital euro on the basis of article 128 TFEU. It further explains that neither tangible cash nor a digital euro can simultaneously be used as instruments in themselves to maintain price stability.

Keywords: cash; banknotes; CBDC; monetary policy; digital Euro (e-Euro); European Central Bank (ECB) (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1093/jfr/fjab009 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:refreg:v:7:y:2021:i:2:p:284s-318.

Access Statistics for this article

Journal of Financial Regulation is currently edited by Dan Awrey, Geneviève Helleringer and Wolf-Georg Ringe

More articles in Journal of Financial Regulation from Oxford University Press
Bibliographic data for series maintained by Oxford University Press ().