The report outlines the progress made on key digital euro design aspects and the envisaged next steps for the project. 

The ECB also welcomed the Commission's proposal to protect the legal tender status of euro cash.

The Governing Council of the ECB will decide in autumn whether to move to the next phase of digital euro project. In this next phase, the ECB would further develop and test the technical solutions and business arrangements. A possible decision by the Governing Council to issue a digital euro would be taken only after the legislative act is adopted.

Commenting on the proposals, ECB President Christine Lagarde said: “The euro is the most tangible symbol of European integration. It is highly valued and trusted by citizens. We look forward to continuing working together with other EU institutions towards a digital euro to ensure our currency is fit for the digital age.”

Executive Board member Fabio Panetta, who chairs the High-Level Task Force on a digital euro, said: “The legislative proposal is key to ensuring that the digital euro brings value to the people, taking the appreciated features of cash into the digital sphere. The ECB also welcomes the Commission’s proposal on the legal tender status of euro cash, to ensure banknotes remain easily accessible for citizens and businesses and widely accepted throughout the euro area.”

He discussed the role of the Eurosystem and private market participants in the digital euro ecosystem; and how the ECB envisages the digital euro being distributed to its users.

The paper provides a structured overview of the literature on the economics of CBDC. It documents the economic forces that shape the rise of digital money and review motives for the issuance of CBDC.

The paper then examines the implications for the financial system and discusses of a number of policy issues and challenges.

The investigation phase will last 24 months and will focus on a possible functional design that is based on users’ preferences and technical advice by merchants and intermediaries.

It 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 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.

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.

The analysis confirmed what the public and professionals want the most from such a digital currency is privacy (43%), followed by security (18%), the ability to pay across the euro area (11%), no additional costs (9%) and offline usability (8%).