Yes, everything is digital, but what changes is how sophisticated the ledger is and who controls it. The digital euro is basically a cryptocurrency, but centrally controlled. It has the benefits of transactions just being an API request. The bank would basically become just one big wallet (or the securer of lots of wallets) and would no longer have to deal with doing the transfers of money and building the bookkeeping, the same way a crypto exchange doesn't send bitcoin from one wallet to another, the blockchain is the one responsible for the transfer, the exchange is only the holder of the wallet and the one that builds the transfer parameters.

As it is today, things are much more decentralized, and each bank is responsible for keeping a record of its own books, and all the protocols that automate transfers still require the bank to be responsible for all that information. Sending money from one bank to another required both banks to have an agreement with each other and a protocol regarding how they would exchange money between them, or to go through one or multiple banks, until there is a path from the original bank to the receiving one. Obviously, this was already improved by having the ECB and enforcing cross-bank mechanisms, like IBAN, but when you fundamentally change the currency to be a cryptocurrency, all of this comes embedded in the currency itself.

There's obviously a downside, which is that everything, even the smallest of purchases, is now fully trackable on a much bigger scale. The fact that money is no longer just fungible money that you can exchange at any time, but programmable money, is also a problem. You could, for example, program some money to be usable in certain ways, have money that expires, etc. Currently, if you have 1€, you have 1€, and you know that you can spend that in any place that accepts euros, and that will remain so as long as people accept euros. But now, you could have 1€, but that 1€ can only be spent in certain places (let's say restaurants), or you could have 1€ that would expire in a year if you don't spend it. That fundamentally changes the relation with money and how people quantify money, and no one really knows what the repercussions would be.

So all Euros would be deposits at the ECB, is that it?

Why did you feel the need to use terms like "cryptocurrencies", "digital currencies", "ledgers", and "API requests" to explain this?

> So all Euros would be deposits at the ECB, is that it?

Not necessarily, no.

> Why did you feel the need to use terms like "cryptocurrencies", "digital currencies", "ledgers", and "API requests" to explain this?

I'm not sure I follow you? I've used those terms because they describe how it works. It's hard to explain things without using the words that exist to explain those things.

Yes. This is really more about having the option to transact without banks being involved at all.

I think a driver is the idea of a European payment system. Why this should be "digital Euros" I don't clearly understand. We don't have digital USD, and we have indigenous payment systems in the US.

Cynical me thinks that someone had a meeting like "how are we going to sell this idea to people" and some consultant went "people like crypto, why don't we say it's a digital currency? The term is meaningless, so we're not technically lying".

Nah; there's a separate project for that, with SEPA Instant as the underlying tech. You don't need a 'digital euro' for that; the digital euro is more about having a way to transact without involving banks.

Isn't SWIFT a European payment system already?

SWIFT is a communication layer, but banks still settle money via separate channels. Plus in many instances, international transfers may end up going through a US entity because of the USD's huge liquidity and volumes for FX exchanges; plus the largest banks being USAmerican.