The European Blockchain Observatory and Forum (EUBOF) has just published a report identifying and evaluating eight (8) alternative design architectures for the digital euro.

The EUBOF report, coordinated by the Institute for the Future (IFF) at the University of Nicosia, goes a step further from previous efforts, by considering specific design options for the digital euro and evaluating them against the core principles and requirements set by the ECB. This large-scale research aims at contributing to the ongoing debate to develop the digital euro, highlighting the following dimensions:

  • How the digital euro will differ based on whether it functions similarly to today's bank deposits (an account-based digital euro) or similarly to today's physical cash (a token-based digital euro).
  • What are the differences based on the underlying technological infrastructure of the new currency, specifically choosing between implementing it atop existing eurozone-wide payment rails (such as the TIPS) or atop novel technological architectures, such as blockchain.
  • Explores whether the ECB, as well as the Eurozone banking system and European citizens, would be better-off if the digital euro was exclusively coordinated by the Central Bank or if it was distributed and managed in collaboration with Europe's commercial banks and other financial institutions.
  • Addresses additional considerations related to technology (interoperability and programmability features of the digital euro), regulatory aspects (traceability, compliance, and AML/KYC enforcement) and end-user experience (fund custody, digital wallet design and user interfaces).
  • Identifies and studies several implications of the digital euro to areas such as financial stability or the operation of the European banking industry.

The figure below denotes the eight (8) different digital euro design options that result from the above design considerations:

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CBDC Design Options1

You can download or read the full report here