Central banks are at various stages in investigating and developing central bank digital currencies (CBDCs) alongside cash. While cash is losing ground to digital private payment methods, the role of public money in payments remains crucial. The potential implications of a society without public money have long been a topic of debate, ¹ highlighting concerns about maintaining its key role in payments. In the digital era, these discussions have resurfaced in central banking and academia. The Eurosystem is now preparing for the potential development of a digital euro alongside cash, the use of which is declining. One of the main motivations for introducing a CBDC is to consolidate the role of public money as the anchor of the monetary system (Lagarde and Panetta 2022), a sentiment not confined to the euro area: in 2022, the Bank for International Settlements conducted a survey of 86 central banks, which revealed that the main reason for introducing a CBDC was to enhance payment efficiency and safety (Kosse and Mattei 2023). Central banks’ ongoing efforts towards CBDCs reflect global momentum and interest in the future of public money in payments.

While there is considerable interest in issuing CBDCs, one challenge lies in striking the right balance between ‘too much’ and ‘too little’ consumer demand (Ahnert et al. 2022). Extensive research has already tackled situations in which a CBDC might become too popular, potentially undermining the banking system (Smets et al. 2022, Assenmacher et al. 2024). However, much less research has gone into ensuring there is sufficient interest in a CBDC for it to be used as a regular means of payment. Despite being universal to any CBDC, this challenge has been identified and qualitatively assessed in the euro area (Bindseil et al 2021, Panetta 2022, Kantar Public 2022). In this column, drawing on Nocciola and Zamora-Pérez (2024), we shed further light on this ‘too little’ scenario. Using a model based on survey data, we quantitatively examine some of the potential drivers and barriers to CBDC adoption and discuss strategies to overcome these obstacles....

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