Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/293946 
Year of Publication: 
2022
Citation: 
[Journal:] Credit and Capital Markets – Kredit und Kapital [ISSN:] 2199-1235 [Volume:] 55 [Issue:] 4 [Year:] 2022 [Pages:] 523-551
Publisher: 
Duncker & Humblot, Berlin
Abstract: 
The present paper provides an overview on current developments of cash usage and issue of central bank digital currency (CBDC) in the euro area and proposes a possible design of a digital euro that allows for instant offline payments. Cash usage at the point-of-sale decreased perceptibly in the past years mainly due to the ongoing trend towards digitalization. However, we show that there are also indications that consumers were somewhat pushed into cashless payments by government regulations and supply-side restrictions by commercial banks. Nonetheless, overall demand for euro cash remained strong and even increased relative to GDP since the financial crisis in 2008. In this process, however, we observe a supply-driven shift towards lower banknote denominations. Central banks all over the world are intensively thinking about the potential issue of ­CBDC as a substitute or complement to cash. Based on some of its preferred characteristics, we propose a double pre-paid scheme combining central elements of TARGET Instant Payment Settlement and electronic money features enabling offline and online instant payments. Since anonymity is categorically discarded by the ECB and as cash has some special advantages from a consumer perspective, the digital euro will rather co-circulate with cash than replace it in transactions.
Subjects: 
Cash
banknotes
money
CBDC
JEL: 
E41
E51
E58
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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