The digital economy and the euro area Prepared by Robert Anderton, Valerie Jarvis, Vincent Labhard, Filippos Petroulakis, Ieva Rubene and Lara Vivian 1 Introduction Digitalisation – the diffusion of digital technologies leading to a digital economy – is “virtually everywhere”. It transforms patterns of consumption and production, business models, preferences and relative prices, and thereby entire economies, making it an important issue from a central banking perspective. Some of the key effects of digitalisation relevant to monetary policy relate to output and productivity, labour markets, wages and prices. The impact of digitalisation on the economy is a function, inter alia, of national economic structure and economic policies, institutions and governance. However, it is not clear whether digitalisation is going to deepen differences between countries or reduce them. It is nevertheless interesting to note that the degree of digitalisation varies across the euro area and EU countries and only a few are as digitalised as the most digital countries in the world.