Euroviews. European CBDC plans reveal diverse worldviews and peculiar bedfellows

In 2023, a most interesting divergence was revealed as European central banks publicly grappled with crucial Central Bank Digital Currency (CBDC9 choices: retail versus wholesale. 

While these options may seem fairly benign to the average citizen, the European Central Bank (ECB), along with the Bank of England (BoE) and the Swiss National Bank (SNB), announced critical and revealing design preferences.

The choice between retail and wholesale CBDCs echoes vastly different worldviews on societal governance and value systems. 

The BoE and SNB lean towards a synthetic model, blending innovation with traditional financial stability, while the ECB finds an unlikely companion in China, embracing a retail CBDC — a digital euro designed in similar ways to China's digital yuan.

This divergence in strategies not only reflects differing societal values but also sets the stage for a competitive shake-up in the European financial sector in 2024 and beyond. 

As the ECB faces scrutiny over its retail CBDC approach, there are concerns that it may disrupt market dynamics and Western core economic principles. The CBDC design is more than a financial saga and there are crucial differences for each path.

In 2023, BoE and the SNB revealed an inclination toward a synthetic CBDC (sCBDC) approach. 

First termed by Tobias Adrian and Tommaso Mancini-Griffoli of the International Monetary Fund in 2019, sCBDC aims to foster innovation and growth by granting licensed private e-money issuers access to central bank reserves, for them to back customer-safeguarded funds with riskless public money.

This design outsources operation and management to private entities, yet offers the public indirect access to central bank money. 

It offers the security of central