The report is only the beginning of the discussion and raises more questions before officially considering the digital euro.

The European Central Bank (ECB) could start to consider and study the digital euro seriously in mid 2021, the bank said in a report published on 2 October.

The report examined how a digital euro can impact retail payments and how it can protect payments in the future. It also examined how virtual currencies could fit into any Eurosystem scenario. However, it does not specify which model the ECB should take when and whether to design its digital currency.

According to the report, the ECB could start a programme for a virtual currency „to ensure that meaningful answers are obtained to the open questions posed“ in the middle of next year, possibly with a research phase to develop the digital euro and carry out experiments. It adds that before the issue can be discussed, the ECB must consider the views of the various stakeholders.

The report noted that digital coins could provide greater financial accessibility:

„The potential benefits of a digital euro and the rapidly changing retail payment landscape mean that the Eurosystem needs to be equipped to issue it in the future. A digital euro could support the objectives of the Eurosystem by providing citizens with access to a secure form of money in the rapidly changing digital world. This would support Europe’s drive towards continuous innovation. It would also contribute to their strategic autonomy by providing an alternative for foreign payment providers to make fast and efficient payments in Europe and beyond.“

The ECB said that there are a number of requirements that a digital euro or Bitcoin Millionaire must meet if it is to be created. The first is that it must keep pace with technology and be available „through standard and interoperable front-end solutions across the euro area and be interoperable with proprietary payment solutions“. Secondly, it must match the distinctive characteristics of cash, be easy to use for everyone, be free of charge and protect privacy. The digital euro should also have functionalities „that are at least as attractive as payment solutions available in foreign currencies or through non-regulated entities“ and should be a tool to improve the transmission of monetary policy. It should also be widely available through resilient channels separate from other payment services and can withstand extreme events such as a pandemic.

The ECB said that the digital euro should also be available outside the euro area, be cost-effective and be designed to be environmentally friendly, which means that it should be based on technology that minimises ecological footprints.

For the ECB, a digital euro should be designed to avoid being used as an investment medium, or even being considered as a kryptonie or a stablecoin. but should be used primarily as a form of payment to avoid price fluctuations:

„Given the risks to the transmission of monetary policy and financial stability, it is not desirable for the digital euro to attract large investment flows. However, if individual holdings of digital euro were too low, either because of rigid constraints or because of disincentives applied above a relatively low threshold, then the digital euro would be less attractive as a means of payment and less competitive than alternative instruments“.

The report also examined various technical and organisational models for the launch of the digital euro. While the report is comprehensive, the ECB stressed that it wants to create a debate on digital currencies with other stakeholders. It does not set out specific methods for the distribution of the digital euro.

ECB President Christine Lagarde said on 10 September that the Eurosystem had not yet made a decision on whether to launch the digital euro, although Lagarde supported this and stressed that it would not replace fiat.

The ECB will consider conducting a more in-depth study on the digital euro in 2021