Will the digital euro be attractive enough to generate significant demand?

The decline in the use of cash and the emergence of innovative digital payment systems have prompted the ECB, like many other central banks, to consider introducing its currency in digital form. The technological problems of introducing a digital euro do not appear unsurmountable. However, one issue that has received less attention is the demand for a digital euro. The digital euro will only be attractive if it offers individual users additional benefits compared to current payment systems. These benefits may relate to convenience, return, cost, transaction speed, risk, and data protection. The paper concludes that hardly any significant additional benefits are currently apparent in these areas. Hence, the case has still to be made that a digital euro is indeed welfare increasing. There are also open questions from a regulatory perspective, as the ECB may become a direct competitor of commercial banks and payment service providers.