Europe Gives A Critical Date For Digital Euro: 2021


The European Central Bank has published the most comprehensive digital euro report ever, explaining the advantages, risks and possible designs of this digital currency project. What will the digital euro look like and above all, that could rival the national crypto money project developed by China; Can it be improved?

In the report published by the European Central Bank, the potential effects of the digital euro, its possible designs, legal dimension, how to integrate it into the economy, its characteristics, and its difference from cryptocurrencies. This study, also supported by ECB President Christine Lagarde, gives us a clue of what the digital euro might look like.

The digital euro is expected to eliminate many problems

Digitalizing the European economy of the digital euro and consolidating the independence of the European Union, taking action against decreasing cash use, making monetary policies flexible, making payment services less risky, consolidating the international position of the euro and making monetary systems less costly for both the economy and the environment Announced that it can be used for

Among the scenarios emphasized by the European Central Bank is one in which another country develops its own digital currency. The ECB is concerned about the digitization of a large country’s currency, the intensive use of this currency in the euro area, the decline in the use of the euro, and the strengthening of a foreign currency. AMB believes that this risk can be avoided by developing its own digital currency.

The date for the decision phase has been given: 2021

Although the digital euro offers many advantages to its affiliate, it brings serious technical difficulties with it. The ECB has not yet decided on what infrastructure can be developed for the digital euro and what technology it can be produced with.

At this point, the European Central Bank is also concerned about the cyber risks posed by the digital euro. The bank explained that if the technical infrastructure of the digital euro is unstable, its reputation could be damaged. Beyond that, the Central Bank suspects that the digital euro is being used for illegal purposes (such as money laundering).

The ECB plans to answer these questions regarding the digital euro soon. Concerned with countries (such as China) and private companies (such as Facebook) developing its own digital currency, the ECB announced that it will be clear in mid-2021 whether the digital euro will be developed or not. In this process, the ECB will try to get as much feedback as possible from both citizens and private organizations.

What are the possible designs for the digital euro?

Although the ECB has not taken a final decision regarding the digital euro, it has already started publishing possible designs. We can cite these designs, which are examined under four main headings, as follows:

  • Direct access to (central) bank accounts: A digital euro system could be developed where people can directly access central bank accounts. In this system, digital euro circulation is completely managed by the ECB and digital euro transactions are carried out directly with the ECB infrastructure. “Private keys” can be delivered to the end user for security purposes. Since there will be too many accounts in this system and they will form a very complex network, the infrastructure of the ECB may not be suitable for such a model.


  • Indirect access to (central) bank accounts: A system can be developed where people can access central bank accounts indirectly. These accounts are still owned by the end user, the digital euro circulation is still completely under the control of the ECB, but since people will only access their accounts through assigned intermediaries, the infrastructure of the ECB is less burdened. In this model, like private companies, intermediaries also have a share in the digital euro system.


  • (Decentralized) Direct access to the digital euro: A decentralized infrastructure can be developed that people can use directly from peer to peer without the need for a third party. AMB can implement this either by using distributed ledger technology (DLT) or by local storage (as with prepaid cards). However, in such a case, an intermediary is still needed to protect physical devices and to load them. This model is thought to be a problem for AML (anti-money laundering) laws.


  • Account-based access to digital euro: A system can be developed in which people can use digital euro with services from intermediary institutions. People can perform their individual transactions through these intermediaries in this system. However, in this system designed to be hybrid (semi-central and semi-decentralized), people will be able to directly claim their accounts and transactions will eventually be completed with the Eurosystem infrastructure.



Please enter your comment!
Please enter your name here