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

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