, as would the relationship between a cbdc and euro banknotes and coins, along with the process by which one could be exchanged for the other. should it not be acknowledged that the ecb ’ s exclusive right to authorise issuance in euro would also be applicable to a digital issuance? a retail cbdc could be based on digital tokens, which would circulate in a decentralised manner – that is without a central ledger – and allow for anonymity towards the central bank, similar to cash. some argue that a token - based digital currency might not guarantee complete anonymity. if that proved to be the case, it would inevitably raise social, political and legal issues. we are currently looking into the legal questions raised by the potential use of intermediaries to facilitate the circulation of a cbdc and also the processing of transactions in a cbdc. to what extent are we permitted to outsource public law tasks to private entities? and what would be the appropriate extent of supervision over such entities? alternatively, a retail cbdc could be based on deposit accounts with the central bank. though involving vast numbers of accounts, it would not be a particularly innovative option from a technological viewpoint. for the euro area, it would basically mean increasing the number of current deposit accounts offered from around ten thousand to between 300 and 500 million. a cbdc of this nature would enable the central bank to register transfers between users, thereby providing protection against money laundering and other illicit uses ( or those considered illicit by the rulers of the day ), depending on the degree of privacy granted to users. these are just two of the many ways to design a cbdc. we are currently scrutinising the various options to assess their potential impact – both positive and negative – on the financial system and on our ability to honour our mandate. disintermediation – economically inefficient and legally untenable you may wonder why central banks have not chosen to provide retail access to central bank money, despite the technology for an account - based cbdc already being largely available. the main reason is that introducing a retail cbdc could have major consequences for the financial system. 2 / 4 bis central bankers'speeches if households were able to convert commercial bank deposits into a cbdc at a rate of 1 to 1, they may find it far more attractive to hold a risk - free cbdc rather than bank deposits. during a systemic banking crisis, this could trigger digital bank

the functions of money, the first tier could serve as a means of payment. the central bank would have to refrain from setting a lower or a negative interest rate in order to keep a cbdc attractive to the public as a means of payment. while the second tier could serve as a store of value, the central banks could discourage people from using it as such by setting unattractive interest rates. however, such schemes should draw from the experience of multiple exchange rate regimes. and the repercussions of the intentional use of such schemes need to be subjected to an additional comprehensive investigation. so we have plenty of questions on cbdc to discuss. i am nearing the end of my speech but look forward to exchanging views with you during our virtual q & a session. conclusion 3 / 4 bis central bankers'speeches in monitoring the evolution and uses of technology, the ecb respects technological neutrality. we do not serve technology – technology serves us. we will only introduce a digital currency if we become firmly convinced that it is both necessary and proportionate to fulfil our tasks in ensuring the stability of our currency. in the meantime, we take a keen interest in digital innovation and in the changing expectations of money users, and we are refining our thinking on cbdc – both within the ecb, the eurosystem and in the international central banking community. cbdc design choices are not merely technical questions. they have policy and legal implications. this is why we are devoting so much attention to every detail. if and when the time comes, we want to be ready – and we will be ready. 1 see boar, c., holden, h. and wadsworth, a. ( 2020 ), “ impending arrival – a sequel to the survey on central bank digital currency ”, bis paper, no 107. 2 including payment solutions denominated in currencies other than the euro, which could affect monetary sovereignty. 3 survey data from 2017 ; see esselink, h. and hernandez, l. ( 2017 ), “ the use of cash by households in the euro area ”, occasional paper series, no 201, ecb. 4 blog post by fabio panetta, member of the executive board of the ecb, ( 28 april 2020 ) : “ beyond monetary policy – protecting the continuity and safety of payments during the coronavirus crisis ”. 5 dyson, b. and hodgson, g. ( 2016 ), “ digital cash : why central banks should start