CBDC / digital euro
A CBDC is digital money issued directly by a central bank; the digital euro is the ECB's project for it.
Explained simply
Today, central bank money for private individuals exists only as cash. Your account balance, by contrast, is a claim on your commercial bank. A CBDC would be digital cash: a direct claim on the central bank, usable via app or card.
The difference from a stablecoin: behind the CBDC stands the state, behind the stablecoin a private company with a reserve. Both mirror the same currency but with different default risk.
The European Central Bank has been preparing the digital euro since 2021. Whether and when it launches is decided by legislators and the ECB Governing Council.
From the familiar world
Cash you carry on your phone. Like the twenty-euro note it is issued directly by the central bank, not by a bank. Except that it can be transferred digitally.
An example
China has been testing its digital yuan in many cities since 2020. In the eurozone pilot phases are running, and the EU Commission presented a legislative proposal for the digital euro in 2023.
Why it matters
The digital euro is the topic where clients notice blockchain-adjacent technology arriving in daily life. For context: it complements cash, does not replace it, and it is not a cryptocurrency in the sense of Bitcoin.
To pass on
„The digital euro would be cash on your phone: straight from the central bank, not from the bank.“
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