While the said decline was mainly driven by the SCT (Special Consumption Tax) reduction on automobiles, white goods and electronic products to be effected for a limited period of three months from March onwards, automobile prices, by displaying sharp decline, were chief determinants in prices of this group. The favorable effect of these reductions started to be observed on the domestic sales of automobiles and household goods in March (Figure 6). Moreover, the temporary VAT cut on furniture and IT products for a three-month period will have a short-term restraining effect on annual inflation in durables. Nevertheless, the lagged effects of the exchange rate pass-through on the prices of durable goods are expected to be partially seen following the depletion of current inventories. Table 1. Prices of Durable Goods (Quarterly and Annual Percentage Change) 2008 I  2009 IV  Annual I  1.58 2.81 -1.80  0.61  3.19  -2.49  4.13 7.60 -1.27  -1.31  9.17  -3.17  Electric and nonelectric 1.16 0.68 0.12 appliances  6.04  8.13  Automobiles  1.04 2.44 -3.63  -2.30  -2.56  -1.36  Other  0.04 0.89 1.02  2.27  4.29  0.36  Durable Goods (excl. gold) Furniture  II  III  -4.26  Source: TURKSTAT. CBT.
In particular, it would be needed in the event that citizens become reluctant to use cash as they go digital. This is not the situation we face today: cash is still the most common way of making retail payments in the euro area. However, its role as a payment instrument is diminishing – in some countries rapidly so – as consumers are increasingly paying electronically:10 as a proportion of all physical retail payments, cash payments decreased from 79% in 2016 to 73% in 2019. This trend has accelerated during the pandemic – with a vast majority of consumers expecting to continue using digital payments as often as they do now, or even to use them more often in the future.11 And because of this trend, we may see a further increase in the uptake of international card schemes and solutions such as payment wallets and apps developed by large technology firms. A digital euro would ensure that even in a situation where there is rapid digitalisation in the world of payments, sovereign money remains at the core of the European payment system. This would contribute to financial inclusion. It would also shield us from the risk that a private or public digital means of payment issued and controlled from outside the euro area could largely displace existing domestic means of payment. Such a development would raise regulatory and financial stability concerns and could even put Europe’s monetary and financial sovereignty at risk. How could a digital euro be introduced?