The digital Euro and the monetary policy implementation

This thesis explores how the introduction of a Digital Euro could affect the implementation of monetary policy in the euro area. It begins with an overview of the rationale behind central bank digital currencies (CBDCs), distinguishing them from other digital payment instruments and analyzing the motivations of the European Central Bank. The work reviews the main theoretical models and international experiences, focusing on the potential effects of design choices, such as holding limits and remuneration on interest rate transmission and liquidity dynamics. A data-driven simulation assesses different issuance scenarios, estimating their impact on the liquidity system and monetary policy tools. The analysis suggests that a carefully designed and limited CBDC could support policy implementation, while excessive issuance may lead to disruptions in liquidity management and weaken monetary control.