The Adoption of Digital Euro: Problems and Perspectives

This paper analyses some aspects of the legal issues related to the digitization of the euro. The first section identifies whether in subiecta materia the application of European or national regulation prevails. In particular, the investigation focuses on assessing the limits of this project and its consequences on different national contexts, with particular attention to the Italian context. With reference to the jurisprudential orientation of the Italian and German constitutional courts, an initial conclusion is then reached regarding the appropriateness of basing the implementation of this project on a politico-legal link between European and national authorities. The second section focuses on the effects of the digital Euro, as an alternative to the types of support for sovereign currency experienced so far. With respect to such alternative, new benefits and risks could emerge. Hence, the analysis refers to the impact on the issuance and the circulation of digital Euro, as well as its effects on the credit intermediation. Indeed, it appears necessary for credit institutions to use the deposit multiplier mechanism even if the central bank sovereign currency has a digital support, as it allows the banks to spread their operating costs over a larger volume of credit than the one of direct deposits (as permitted by the current analogic banking procedures); this, with obvious positive effects on the functioning of the credit sector.