4. A brief history of central bank money
The Bank of England was
a model for central banks
and operation of the gold
standard. The reform of
the Bank of France in
1848 resulted in the first
modern central bank as a
public institution with a
monopoly on bank note
in 1875, was probably the
most modern in terms of
The Reichsbank pioneered
cashless transactions with the
first giro-transfers or book-
entry adjustments for the
transfer of credit balances.
The Federal Reserve was
established in 1913. In the
‘70s it became the first to
use electronic transfers for
its large-value payments
system (Fedwire). This has
become the standard for
real-time gross settlement
systems and processing of
central bank reserves.
CBDCs would be a new
form of central bank money
that would complement
banknotes and reserves.
replace the gold
5. CBDC is a third format of money that exists alongside cash and electronic deposits. It is fully
fungible at a 1:1 rate with cash and central bank reserves. CBDC is the first digital form of central
bank money available to the public and is best thought of as a digital form of cash that is
transferable P2P. It offers additional functionality such as programmability. The issuance and
distribution of any form of central bank money, excluding bank notes, is nowadays strictly local.
A CBDC is a token-based payments medium with the properties of digital bearer instruments. It
utilizes either a one-tier or a two-tier distribution model. For retail, a two-tier distribution model
requires that businesses and individuals have wallets with their bank and request CBDC through
their bank. The model limits disintermediation of the banking system, keeping the current system
intact while spurring innovation.
The introduction of a CBDC merits careful consideration of a large variety of design features. Some
of these are independent, others involve trade-offs. For the most durable results, these choices
should be made in line with the central bank’s objectives. The considerations include resiliency,
scalability, performance and throughput, availability, security, cost and efficiency, and
What is a central bank digital currency?
6. The Bank of Japan said
its pilot will test the use of its
CBDC and a forum will be set
up with the private sector to
discuss retail payments and
The Central Bank of
Brazil has invited firms to co-
pilot its CBDC, the digital real.
The pilot includes testing the
buying and selling of federal
public bonds by individuals.
The European Central
Bank communicated its
desire to focus on:
• Tokenization of securities
leveraging a wholesale
CBDC for securities
settlement issued on DLT.
• Wholesale CBDC as a vehicle
to enhance cross-border and
BIS (The Bank for International Settlements) announced project Mariana to investigate the use of automated market makers for FX trading and settlement with testing
across the Swiss franc, euro and Singapore dollar.
mBridge continues post-pilot to advance real live transactions across 20 commercial banks in 4 jurisdictions.
The Reserve Bank of
India and the Central Bank of
UAE started to collaborate on
financial services innovation.
The PoC and pilot focus on
Recent CBDC developments
The Reserve Bank
of Australia tested a series of
use cases including offline
payments, tokenized bills,
interoperable CBDC for
trusted Web3 commerce and
liquid assets security trading.
BIS (The Bank for International Settlements) announced project Mariana to investigate the use of automated market makers for FX trading and settlement with
testing across the Swiss franc, euro and Singapore dollar.
7. Defining the future of money
A CBDC would constitute a new format of central bank money, the
digital token, to serve as settlement medium on alternative
financial market infrastructures. It is to extend access and reach of
central bank money to address actual and new payment needs.
CBDC, given the importance of central bank money, can serve as
catalyst to shape the future of money itself.
Introduction of a new format of money and payment
infrastructure could make the payments landscape more diverse
and resilient. CBDC may also serve broader public policy objectives
and support government-led initiatives including to extend financial
assistance including to address emergencies.
A MORE RESILIENT & DIVERSE PAYMENTS LANDSCAPE
CBDC may unlock payment innovation in retail, cross-country and
wholesale payments. This would encourage competition and the
creation of new services like offline payments, immediate asset
settlement and custody solutions by existing financial institutions
and new actors.
NEW SERVICES, INNOVATION & COMPETITION
CBDC can exhibit new functionalities like programmability and
traceability that can support new use cases. Programmability
facilitates embedding complex business logic into payments.
Traceability ensures provenance is assured and can help
establishing a safer and more transparent payments environment.
A CBDC could enhance the usability and attractiveness of the
national currency and promote its
international use strengthening the strategic autonomy of countries.
CBDCs may help accelerate the transition to a digital
economy advancing digital inclusion for the society at large.
PAYMENTS EFFICIENCY & RISK ELIMINATION
CBDC offers the possibility to enhance efficiency given the nature
of token-based transfers and exchanges. It shall derisk payments
and establish more direct payments relations in particular for
international transactions. Tokens enable instant and atomic
settlement increasing the velocity of money and changing the
nature of liquidity.
ECONOMIC AND SOCIETAL BENEFITS
NEW MONEY FORMAT
9. A digital euro is the same euro as the physical currency – it just has a different format.
▪ The digital euro will be central bank money – in a digital format – accessible to the general public to serve as a payment
instrument in retail transactions.
▪ It will likely be based on digital tokens.
▪ It will be a direct liability of the Eurosystem, similar to banknotes. Issuance of a digital euro will be a substitution of
Eurosystem liabilities and will not change the size of the Eurosystem balance sheet.
▪ Banks will be intermediaries, similar to their role in the distribution of banknotes. At the same time, they may be users.
What is a digital euro?
10. Digital euro Timeline
Publication of Eurosystem report on a digital euro (interesting feature: a digital euro shall be held by
Publication of public consultation on a digital euro. Public stresses need for privacy (other surveys
find less emphasis on privacy)
ECB launches digital euro project with initial investigation phase to start in October 2021. Design shall
be informed by users’ preferences and technical advice.
Report on payment preferences. Users want universally accepted payment methods online and in-
store and prefer instant and contactless person-to-person payments.
First progress report offers possibility to introduce holding ceilings to “limit individual take-up and
the speed of deposit conversion”.
Second progress report to highlight two-tier distribution model and affirmation that Eurosystem shall
perform all settlement activities.
Third progress report on access for non-banks and governments and for non-resident if they have
access to a Euro Area payment service provider. Limits to be introduced.
June 2023 European Commission to propose regulation to establish a digital euro.
October 2023 Decision to launch development and build phase for digital euro to launch in 2026-27.
11. Players involved in the investigation phase
As per ECB disclosed communications. Source: https://www.ecb.europa.eu/paym/intro/news/html/ecb.mipnews220916.en.html
The aim of this prototyping exercise is to test how well the technology behind a digital euro
integrates with prototypes developed by companies.
PEER-TO-PEER ONLINE PAYMENTS
PEER-TO-PEER OFFLINE PAYMENTS
POINT-OF-SALE PAYMENTS INITIATED BY THE
POINT-OF-SALE PAYMENTS INITIATED BY THE
12. A digital euro will complement existing central bank banknotes and offer a “cash plus” option.
Key ECB arguments include:
▪ Integrity: This rests largely on the view that, in the event of the disappearance of cash, citizens should have
access to central bank money, on demand.
▪ Resilience: It is seen as a response to the threat of alternative payment means, especially initiatives like Meta’s Diem.
▪ Integration: A digital euro will help in the establishment of a pan-European payments framework.
▪ Diversification: It will form part of alternative payment systems.
▪ Confidence: The digital euro is essential to safeguard confidence in the financial system.
(This is a controversial point, the economics of which seem weak.)
Why is a digital euro needed?
The ECB is struggling to present a convincing vision of the digital euro – most of its arguments are defensive and place insufficient
emphasis on innovation. This could endanger the project.
Many are still asking: “What is the point of a digital euro?”
13. A digital euro will serve as a payments
The project focuses on:
▪ Person-to-person payments conducted
(i) online and (ii) offline
▪ Payments initiated in-store
(iii) by the payer and (iv) by the payee
▪ Payments for (v) e-commerce
Use cases examined by the digital euro project:
The ECB has been conducting various experiments to test different possible components of a digital euro. These include front-end
and back-end prototypes using UTXO data models and API interfaces.
14. The debate
DIGITAL LIMITS PRIVACY COMPENSATION
The choice of
There is speculation
that a digital euro will
not be based on a
blockchain; it could use
a centralized system
and/or be account-
based and an extension
of existing payment
Banks have repeatedly
voiced concerns that a
digital euro will crowd
out bank deposits.
Evidence for this is
As a mitigating
measure, the ECB
proposes limits for
which the economics
Digital payments are
The ECB wants the
digital euro to be the
most private digital
money, with possibly a
tiered structure of
depending on the
A compensation model
will be critical to ensure
the economic viability
of the digital euro and
will not unduly rely on
Merchants will likely be
key to adoption if they
benefits of driving
customers to using a
Components of a future
of the digital euro will
to adopt new
A digital euro will
be integrated with
Accounts vs Tokens
Money is normally an account or book entry. Accounts
represent liabilities of the account issuer and transfers can
be performed between account holders of the same
Tokens represent a new medium with properties akin to a
bearer instrument. They constitute liabilities of the token
issuers are held in wallets and typically aim to be
transferred peer-to-peer. Tokens offer functionalities like
programmability and traceability to address new
Centralised vs Decentralised systems
Existing payment infrastructures rest mostly on
centralised systems where a system operator validates
and performs transactions. All data and values are with a
Blockchain or other distributed ledger technology (DLT)
platforms typically constitute a network of independent
computers where validation and transfers are determined
jointly by the computer network. All data and values are
distributed amongst network participants.
16. The Limits
Banks have repeatedly argued that a digital euro (retail)
will cause liquid balances to migrate from bank accounts
to the digital euro due to the safety attributes of central
bank money. In addition, there is a fear that if a digital
euro is considerably cheaper to transact with than
conventional payment means, merchants will encourage
end-users to use the digital euro.
To protect banks, holding ceilings have been considered
as a means of limiting digital euro balances
Economics of limits
Limits serve to micromanage the demand for central bank
money. Limits are a direct monetary policy measure that are
normally at odds with existing monetary policy frameworks.
The case for limits remains speculative amid weak evidence of a
threat of bank disintermediation.
Limits would be perceived as arbitrary. In the euro area a limit of
€3,000 has often been proposed, while in the UK limits of
£10,000-20,000 are being discussed.
Demand for money is normally addressed through monetary
policy measures. If the demand for a digital euro is perceived as
being inconsistent with the objective of central bank monetary
policy, the central bank should resort to its available monetary
17. Bank disintermediation
Germany: Deposits in state savings banks.
▪ The evidence supporting concerns about bank disintermediation
▪ Deposit patterns do not suggest that there is systematic cyclical or
structural migration from weak to strong banks and from private-
to public-sector banks, even in times of financial distress.
▪ The recent banking crisis in the US caused a deposit outflow from
small banks amounting to no more than 4% of total deposits.
▪ Germany’s savings banks or Sparkassen, which are state-owned
banks, have maintained a relatively stable 23% - 27% share of
total deposits, confirming the view that safety is not a
determining factor for deposit holders.
Percent of total deposits of all banking groups
Data Payer Payer Wallet Payer PSP Central Bank Payee PSP Payee Wallet Payee Other PSPs*
Payer ID X ? X ? ?
Payer wallet ID X X X ? X X
Payer PSP ID X X X ? X X X
Payer public key(s) ? X X X X X ? X
Amount X X X X X X X X
Payee public key ? X X X X X ? X
Payee PSP ID X X X ? X X X
Payee wallet ID X X ? X X X
Payee ID ? ? X ? X
Minimum visibility of payment data in a tokenized and intermediated CBDC
* On decentralized implementations only – DLT distributes some or all data to all network participants.
• Payer and payee may be offered an option to share or not share their identities with each other, depending on policy.
• Public keys could be long-term, short-term, or single-use (per-payment). Re-use of a public key reveals correlations between a
given user’s payments to the central bank and other PSPs.* Single-use keys minimize such correlation.
• Additional techniques can improve privacy and data protection:
– Participating PSPs can be contractually or legally bound to use collected data only for specific purposes (e.g., transaction validation)
– Cryptographic techniques can hide data while still allowing verification of correctness (so-called zero-knowledge proofs)
– Confidential computing uses secure hardware to protect data; data is encrypted whenever not inside secure hardware
The digital euro will ensure considerable privacy, although
not complete anonymity. The ECB will safeguard only meta
data and will not have access to transaction data. The aim
is to make the digital euro the most private digital money.
Cash may not represent an adequate benchmark for
providing privacy in payments
Privacy matters largely when determining disclosure vis-à-
vis a given entity. While intermediaries will likely maintain
information currently available of their customers,
merchants may not or only learn very little about the
identity of the payer.
The general public seems more concerned to share data
with the ECB than with private actors.
Not clear if central bank’s mandate is to safeguard privacy
for the general public.
20. A compensation policy to incentivize distribution?
MODEL IS STILL TO BE
▪ Banks may pay a transaction fee similar to
▪ Current CBDC cases do not include fees /
sums to be paid by the payer or the
▪ It is still unclear if commercial banks can
apply fees to end users: i) current account /
card holding fee (on the consumer side) and
acquiring fees (on the merchant side).
1. Fee per transaction to be paid by the banks, similar to actual TARGET2, TIPS remuneration model
▪ Establishment of a distribution model will
take account of commercial considerations.
▪ Network effects will generate economic
incentives for acquirers and merchants.
▪ A compensation model should be aligned
with the compensation structures of existing
▪ The ECB is assumed to collect seigniorage
similar to the issuance of banknotes.
21. Functional architecture (tentative)
A possible functional architecture
will demand new components to
be integrated with existing core
banking and payment systems.
Intermediaries will need to add a
wallet and integration thereof with
its back end system to fund,
defund and settle digital euros and
other peripheral components.
Digital euro could be held by
intermediaries or passed through
directly to end-user wallets.
Node / Wallet
Fraud and risk
22. Wholesale CBDC
ECB announced the exploration of new
technologies for wholesale CBDC
recorded on DLT platforms.
Central bank money plays a special role in
large-value payments, making it likely that
a digital euro for wholesale would be of
Several central banks have focused on
wholesale CBDC, particularly for
international payments to challenge the
existing correspondent bank architecture.
Securities settlement: Advent of tokenised securities would
benefit from using a tokenised high grade settlement medium
to enable a token-based securities life cycle end-to-end.
International payments: Sending money abroad should be as
quick and simple as sending a text message.
Foreign exchange trading: Largest financial market still relies
on a slow, highly intermediated system with important residual
risks in particular for smaller currencies.
23. Securities life cycle
In a token-based exchange, a security
token is simply exchanged instantly and
atomically against a wholesale digital
euro, eliminating most risks
▪ Conventional securities trading is subject to
various functions in the securities life cycle,
including trade execution, clearing,
settlement and custody.
▪ The exchange of the security vs. money
involves multiple actors depending on the
nature of the security. Clearing will be
performed at different levels.
▪ In a token-based exchange, a security token
is simply exchanged instantly and
atomically against a money token (a
wholesale digital euro). A DLT platform can
be custodian, CSD and settlement engine at
the same time. Lack of open positions
implies no need for a CCP or other risk
CSD Clearing bank
Conventional and new
24. International payments
International payments based on a
token platform will overcome current
hurdles associated with correspondent
▪ International payments rely on a network
of correspondent banks.
▪ Payment chains can comprise several
institutions, with every bank adding to
potential risks in the transfer.
International payments typically are slow,
opaque and costly.
▪ International payments based on a token
platform would consist of sending a
money token (wholesale digital euro)
from the payer bank to the payee bank.
The payee would hold a token that could
be exchanged or held to perform future
Bank A Bank B
Conventional and new
of Bank A
of Bank B
25. Foreign exchange trading
Foreign exchange on a token platform
would be a direct exchange of principal for
principal instantly and atomically in
wholesale digital euro
▪ The foreign exchange market is the largest
▪ Transactions typically consist of making
transfers in the respective currencies in the
large-value payment systems of the country of
the currency. Final exposures are therefore to
correspondent banks only.
▪ For transactions cleared by CLS bank for 18
currencies, exchanges benefit from
multilateral clearing and netting. But similarly,
the transactions are not settled instantly.
▪ Foreign exchange on a token platform would
be a direct exchange of principal for principal,
instantly and atomically, in central bank money
(wholesale digital euro) with no need for
clearing and netting.
Bank A Bank B
Conventional and new
of Bank B
of Bank A
26. Functional requirements
Token-based mediums require a new custody
infrastructure and will live outside existing book-entry
systems. Custody represents a foundational capability.
Co-existence of token and book-entry mediums will
become the norm.
Token custody applies to most tokenised instruments
including money, securities and other assets. Adoption of
token custody therefore exhibits a universal character.
Seamless integration with existing core banking and
payment systems and where applicable at the point of sale
across all form factors will be key for successful adoption
and ensure there will be no undue fragmentation in
Integration will comprise all needed systems that serve to
execute transactions and administer money balances to
ensure the integrity of the general ledger.
27. Next steps for the digital euro
The choice of backend
architecture will determine
if the digital is to expand or
capabilities. Priorities will
have to be defined in terms
of financial innovation,
Retail and wholesale use
cases can co-exist. While
retail will likely struggle to
compete against existing
payment means, in
wholesale the importance
of central bank money
and new needed
functionalities are expected
to drive adoption.
The final architecture will
determine what additional
developments will be
required for a successful
integration with existing
Token based mediums will
require new components
The digital euro could be
rolled-out in a big bang
approach (introduction of
the euro bank notes) or
gradually (TIPS). Merchants
need likely be key
promoters. Wholesale use
cases afford more flexibility
and are less complex.
28. The role of the
29. How the “private” sector is moving
FOCUS ON INTERMEDIATION FOCUS ON DISTRIBUTION FOCUS ON NEW POSITIONING
Build infrastructure and design solutions to
enable interoperability between CBDC / crypto
and traditional payment ecosystems
Provide as-a-service and end-user solutions
to speed up adoption of blockchain assets
(e-wallets, cards, acceptance devices,…)
Money issuance or new money mediums to
“One-click” NFT purchases
Bridge CBDC with traditional payments
Spend fiat and earn crypto
Processing on Crypto prepaid card
Acquisition of blockchain cybersecurity provider
Processing on CBDC prepaid card
Integration of cryptos in PayPal wallet
Global crypto exchange
Acceptance of crypto at checkout
Crypto reporting tool for accounting/ tax
Processing of crypto funds
WL crypto payments app IT platform to issue gold-linked coin
▪ Issuing of a J.P.Morgan coin for B2B real-time payments
▪ B2B real-time payments on Onyx blockchain-based network to
facilitate real-time B2B payments
▪ Blockchain-based open financing platform for trade settlement
▪ Foreign exchange post-trade platform to cut down reconciling efforts
on different back offices
▪ DLT-backed infrastructure to enable real-time 24/7 settlement in
the wholesale market
▪ USDF stablecoin offered by banks to support new and existing
P2P, C2B, B2B, and bank-to-bank payment applications with real-
time settlement and low cost
▪ DLT-based payment app for individuals, enabling P2P real-time
▪ DLT-powered corporate lending platform to boost flexibility and
transparency in loan negotiations between bankers and corporates
▪ DLT infrastructure to enable real-time trade / settlement via smart
▪ Introduction of a stablecoin pegged to the euro, providing clients
with a robust settlement asset for on-chain transactions
32. The positioning of financial institutions
EVOLVE YOUR PRODUCTS AND SERVICES
ACQUIRING SERVICES EVOLUTION: SW/ HW update to
current infrastructure (POS, ATM) and launch of new features
TOKENIZED BANK PRODUCTS: E.g. deposit, credit,
insurance, trade finance…
DATA MONETIZATION: Includes PFM/BFM evolution,
triggering / campaign as a service and raw data monetization
EXCHANGE PLATFORM: Build an exchange to enable a digital
euro – fiat, D€-CBDC and CBDC-crypto conversion
DIGITAL EURO CARD: Physical / virtual card enabling digital
euro transactions at traditional physical / virtual POS
DIGITAL EURO LIQUIDITY MANAGEMENT SUITE: To be
provided to governments and corporates to monitor and
control the usage of the digital euro
CAPTIVE DIGITAL EURO WALLET: Deploy a front end to
enable your customer base to be fully interoperable with other
fiat / CBDC currencies
DISCOVER NEW BUSINESS MODELS
NEW DEFI ECOSYSTEM ENABLER: Leverage smart
contracts to create second-level financing enabling
financial solutions beyond payments
BANK-AS-A-SERVICE PROVIDER: Enable tier 3 banks
to catch up with digital euro innovation (e.g. treasury,
digital wallet / front-end)
ORACLES : New role consisting of validating
information from the real world to enable smart
contracts on the CBDC blockchain
CBDC PAYTECH: To enable digital euro integration /
interoperability, anti-fraud, digital identity, …
34. Who to contact?
Alejandro González Ruiz
Our global Digital Financial Markets and Payments team is on
hand to support you with your digital money journey, end-to-end
from strategy through to implementation.
Ignacio Lopez del Moral
We are here to
banks in their
journey to digital
CBDC and digital
▪ Due diligence
▪ Policy making
▪ Regulatory and
▪ Risk assessment
▪ Target operating model
How our team can help you
36. Accenture and the digital euro
Accenture is one of five consultancy firms that form part of a
framework agreement for digital euro design, business model and
realisation with regard to the investigation – and eventually
realisation – phase of a digital euro.
Accenture was a partner for prototyping user interfaces for a digital
euro and their processing through the Eurosystem’s interface and
back-end infrastructure completed in March.
Accenture responded in February 2023 to a public consultation as a
market research exercise on potential design solutions in the market.
Accenture also undertakes work with national central banks of the
Eurosystem including with the Bundesbank and the Banque de
France on wholesale CBDC applications.