On 14 July, the European Central Bank (ECB) announced that the Governing Council of the ECB has decided to launch the investigation phase of a digital euro project. The President of the Eurogroup expressed his full support for the project.

The digital euro would be the CBDC (Central Bank Digital Currency) of the Eurozone: the digital version of the fiat currency. In essence, the digital euro would be the digital equivalent of the physical euro in cash. A virtual currency parallel to banknotes, legal tender and guaranteed by the European Central Bank, used for payments in the 19 countries of the euro area and accessible to businesses and citizens to pay in a faster, safer and more innovative way. A digital euro could also support the general economic policies of the European Union (EU). It could satisfy the emerging payment needs of a modern economy by offering, alongside cash, a safe digital asset with advanced functionalities.

The investigation phase will last 24 months and aims to address key issues regarding design and distribution of the digital euro. This investigation is the follow-up phase of the publication of the ECB report on a digital euro and its positive results on how the digital euro could support the Eurosystem’s objectives by providing citizens with access to a safe form of money in the fast-changing digital world. The investigation phase will benefit from the experimentation work done by the Eurosystem over the past nine months and will focus on the following priority objectives: a riskless, accessible, and efficient form of digital central bank money.

During the project’s investigation phase, the Eurosystem will focus on a possible functional design that is based on users’ needs. It will also assess the potential 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 define a business model for supervised intermediaries within the digital euro ecosystem. A market advisory group will take account of prospective users’ and distributors’ views on a digital euro during the investigation phase.

The project will also address the several issues related to the changes to the EU legislative framework which might be needed and will be decided by European co-legislators.