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 (CBDC) when he spoke at the IESE Business School Banking Initiative Conference on Technology and Finance on Friday. Panetta the issuance of central bank digital currencies 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 explained that the key to maintaining financial stability in the face of the advent of digital currencies is to allow commercial banks to play a part. As the central banks gained from the experience of customer onboarding as well as Anti-Money Laundering, this would enable the banks to keep providing front-end service.