The promised digital euro started to take shape this week, and signals from Frankfurt may offer some relief to nervy commercial banks worried about being sidelined by the latest disrupter. With the “hands off” pandemic accelerating the demise of physical cash, and private-sector crypto and stablecoins threatening to invade the space, the pledge last year of a digital euro within five years came before the European Central Bank (ECB) knew what exactly it would be or how it would function.

The debate over design has ranged widely — from digital tokens to direct central bank accounts or something in between. But responses from the ECB’s public consultation, released this week, have gone some way to narrowing the options, with the feedback showing a preference for privacy, though not anonymity, and a role for the existing banking system...

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