Digital Euro, Monetary Objects and Price Stability—a Legal Analysis

Journal of Financial Regulation

Osgoode Legal Studies Research Paper

38 Pages Posted: 6 May 2021

See all articles by Corinne Zellweger-Gutknecht

Corinne Zellweger-Gutknecht

University of Zurich; University of Basel

Benjamin Geva

York University - Osgoode Hall Law School

Seraina N. Grunewald

Radboud University Nijmegen

Date Written: January 1, 2021

Abstract

The Eurosystem is mandated to safeguard price stability according to Article 127 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 optimal monetary objects for the public. While monetary policy constitutes the instrument used to keep prices stable, the availability of optimal 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 optimal 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: CBDC, digital euro, TFEU, Eurosystem, European Central Bank (ECB), banknotes, cash, monetary objects, monetary objectives, monetary policy instruments

JEL Classification: E40, E42, E51, E52, E58, G21, G28, H41, H44, K00, K23, O33, O52

Suggested Citation

Zellweger-Gutknecht, Corinne and Geva, Benjamin and Grunewald, Seraina, Digital Euro, Monetary Objects and Price Stability—a Legal Analysis (January 1, 2021). Journal of Financial Regulation, Osgoode Legal Studies Research Paper , Available at SSRN: https://ssrn.com/abstract=3839325

Corinne Zellweger-Gutknecht (Contact Author)

University of Zurich

Rämistrasse 71
Zürich, CH-8006
Switzerland

University of Basel ( email )

Peter-Merian-Weg 8
Basel, CH-4003
Switzerland

Benjamin Geva

York University - Osgoode Hall Law School ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada
416 736 5045 (Phone)
416 736 5736 (Fax)

HOME PAGE: https://www.osgoode.yorku.ca/faculty-and-staff/geva-benjamin/

Seraina Grunewald

Radboud University Nijmegen ( email )

Postbus 9108
Nijmegen, 6500 HK
Netherlands

HOME PAGE: http://https://www.ru.nl/english/people/grunewald-s/

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