Designing the digital euro: meso-level

Annelieke A.M. Mooij

Chapter 9 in Designing the Digital Euro, 2026, pp 117-127 from Edward Elgar Publishing

Abstract: This chapter examines the meso-level design of a blockchain for the digital euro, focusing on decision-making, incentive structures, and consensus mechanisms. It contrasts on-chain and off-chain governance, noting that while on-chain governance offers transparency, legal and institutional constraints make off-chain governance more suitable. The incentive mechanism must ensure that payment service providers (PSPs) validate transactions rather than merely adding blocks for new customers. Traditional monetary incentives may introduce unnecessary complexity, making a quid pro quo system a viable alternative. Regarding consensus mechanisms, Proof-of-Work and Proof-of-Stake models are dismissed due to energy inefficiency and vulnerability to manipulation. Instead, a Byzantine Fault Tolerant (BFT) system with enhanced scalability is recommended, balancing security and efficiency. The chapter concludes that governance, incentives, and consensus must align with the legal framework and operational needs of the digital euro. The following chapter explores macro-level design considerations, including governance and institutional oversight.

Keywords: Digital Euro; CBDC; ECB; Blockchain; Governance (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035390632
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