Who Will Use a Digital Euro?

It is unclear whether the public and merchants will use a central bank digital currency (CBDC) to make a payment. The European Central Bank (ECB) has published a paper that explores this based on survey payment data and using a quantitative framework that estimates CBDC demand based on individuals’ preferences for the attributes of different payment options.

Two areas of concern are a lack of information about CBDCs and whether and how quickly payment methods based on a CBDC will become available, when will a CBDC have sufficient ‘critical mass’ to generate innovation and large scale adoption. The paper finds design choices to be key.

Summary

If a CBDC is issued either it won’t be used very much and private digital payments will continue to be the dominant way of paying, or it will be used at scale – risking bank disintermediation and the financial instability this would probably cause. This paper focuses on the first of these.