European Central Bank executive board member Fabio Panetta provided an overview of the central bank’s current research on a retail central bank digital currency Friday when he spoke at the IESE Business School Banking Initiative Conference on Technology and Finance. Panetta the issuance of central bank digital currencies, or CBDCs, is “likely to become a necessity,” but warned that “they should not become a source of financial disruption that could impair the transmission of monetary policy in the euro area.”

Panetta stated that allowing commercial banks to participate in the digital currency introduction is key to financial stability. The banks would be able to provide front-end services while the central bank benefited from their expertise in customer onboarding, Anti-Money-Laundering and other areas.