A digital euro would be a digital form of central bank money, specifically the euro. It could be used by the general public in much the same way as cash, only in virtual form. This would make the digital euro a retail CBDC (Central Bank Digital Currency). Alongside cash, the Eurosystem would thus supply households with an additional form of central bank money that can be used quickly, easily and securely.
Project digital euro
In mid-July 2021, the Governing Council of the European Central Bank (ECB) decided to launch a two-year investigation phase on the digital euro starting in October 2021.
During the project’s investigation phase, the Eurosystem will focus on a possible functional design that is based on users’ needs. It will involve focus groups, prototyping and conceptual work. The investigation phase will examine the use cases that a digital euro should provide as a matter of priority to meet its objectives: a riskless, accessible, and efficient form of digital central bank money.
The project will also shed light on the changes to the EU legislative framework which might be needed and that will be discussed with, and decided by, European co-legislators. The ECB will continue to engage with the European Parliament and other European policymakers throughout the project’s investigation phase. The technical work on the digital euro with the European Commission will also be intensified.
Finally, the investigation phase will assess the possible impact of a digital euro on the market, identifying the design options to ensure privacy and avoid risks for euro area citizens, intermediaries and the overall economy. It will also define a business model for supervised intermediaries within the digital euro ecosystem. A Market Advisory Group (MAG) will take account of prospective users’ and distributors’ views of a digital euro during the investigation phase.
Only after the investigation phase has been completed will it be decided whether the digital euro will actually be introduced. In this case, it would be followed by a market introduction phase of about three years.