. we are now halfway through the investigation phase and our aim is to complete it by the end of next year. then, the governing council will decide whether to move into the implementation phase, in which technical solutions and business arrangements for a digital euro would actually be developed and tested with a view to their potential launch. the promotion of innovation and the spanish experience with a sandbox the direct provision of payment services, as would ultimately be the case with the digital euro, is not the only strategy or tool that central banks have to respond to increasing digitalisation and use of new technologies by the financial sector. the instruments adopted by each supervisor or regulator differ depending on whether they are more focused on maximising the benefits stemming from digital innovations or on mitigating their potential risks. for instance, as mica illustrates, regulation could be useful to curb these risks, but the authorities may also hamper innovation in a jurisdiction, should the regulations not be well calibrated. on the other hand, the deployment of innovation hubs and accelerators, which takes me to the last part of my address, may successfully contribute to maximising and better understanding the benefits of new technologies for society. hence, they could encourage financial innovation and / or increase the adoption of these technologies by the supervisory authorities in their functions. indeed, regulatory sandboxes try to find a balance between these two objectives : they are defined as controlled and delimited environments in which technology - based financial innovations can be tested and monitored by the supervisors, while minimising the risks to the financial system and 5 / 6 bis - central bankers'speeches consumers. this is the main tool adopted by spanish financial authorities since 2020 to respond to the emergence of new technologies in finance. the spanish sandbox has opened up new ways for supervisory authorities to engage and cooperate with the fintech sector, whose players frequently do not have at their disposal other ways of interacting with financial authorities. more importantly, the sandbox has increased the participating firms'understanding of regulation and supervisory expectations and improved their regulatory compliance through their close interaction with the supervisor. the sandbox has also enhanced the supervisors'understanding of both the new technologies applied by the financial sector and their underlying benefits and risks, as well as of the potential regulatory barriers faced by innovators. four cohorts have been run up until now, and the banco de espana has already published reports with the conclusions of six projects. the overall experience has been positive and encouraging. that said, the sandbox

said, cbdcs may come in different shapes and forms ; therefore, adequate design and implementation are needed in order to minimise their impact. this is not a minor task and requires careful analysis. there are many interlinked design options and they all have to be considered, both individually and holistically, in order to ensure they are a perfect fit. this is, in fact, what the eurosystem is currently doing in the context of the digital euro. no decision has yet been made regarding its issuance or its final design, but we launched the investigation phase of the project last year in order to ensure we are prepared in the event that future developments warrant its launch. our work is now focused on deepening the conceptual analysis by assessing the different design options, as well as the distribution model. the first step was to identify the use cases to focus on, namely those that better support the policy objectives of a digital euro and facilitate network effects. payments in e - commerce and physical stores, as well as person - to - person payments are, clearly, natural candidates. they either represent important market segments or have a clear potential to grow, and they rely heavily either on cash or on non - european providers and technologies. payments between governments and individuals have also been considered a priority, given their potential synergies with the aforementioned ones. in any case, focusing now on these payment segments does not mean ruling out others, but simply leaving them for future stages. the next step of the analysis has covered what we consider to be the foundational design options. they refer to the way a digital euro should be transferred, the level of privacy and the tools to control excessive use and, hence, limit its impact on the stability of the financial system. as regards the transfer mechanism, we have decided to prioritise a digital euro solution in which transactions are transmitted online and validated by a third party, since this model covers the broadest set of use cases and supports the eurosystem's policy objectives. peer - to - peer validated offline payments are also going to be further explored, but this option presents a number of technical and regulatory challenges that make its time to market more uncertain. privacy is a design consideration that was rated high in importance by respondents to the public consultation we carried out at the end of 2020. 1 in principle, a digital euro should provide the same level of privacy as current digital payment solutions in order to comply with the regulatory framework. however,