D-euro: issuing the digital trust

Since 2008 new schemes such as digital currencies have emerged in limited forms. Currently, dig-ital technologies enjoy a widespread use in the area of payments and, as a result, central banks have started contemplating the costs and benefits of issuing a digital currency for broad use in payments and settlements. This paper defines Central Bank Digital Currency (CBDC) and clas-sifies it alongside existing forms of money. Further, it highlights the properties that such a cur-rency should have, and analyses the main motivations behind the potential issuance of an account-based retail CBDC (called here the “d-euro”). We argue that the latter should involve a public-private partnership whose effectiveness will be enhanced by the establishment of separate and distinct roles. This paper briefly discusses legal considerations, monetary policy implications and financial stability issues arising from d-euro. In doing so, it further analyses d-euro’s underly-ing principles, which would at the same time constitute its key benefits. We provide a general framework and propose the technical design of our so called “two-dot model”. Issues concern-ing parity, supply limits and anonymity are dealt with. The proposed technical design seems an effective and workable solution that boosts the autonomy and resilience of the European pay-ment systems. Finally, we argue that the initial introduction of d-euro as a retail payment medium may establish it as the new cash of a digitalised ecosystem, reflecting a new digital trust issued by central banks.