Cash, accounts, and central bank digital currencies: a legal view on the introduction of account- and token-based digital central bank money

ABSTRACT The introduction of a new form of digital central bank money (Central Bank Digital Currency – CBDC) is actively discussed in the Eurozone. This paper explores different design features of retail CBDC and highlights terminological inconsistencies in the debate surrounding their legal status. It compares CBDC to incumbent forms of money and analyses central questions regarding their introduction from the perspective of European Union law, especially whether the ECB has to power to introduce CBDC and under which conditions CBDC would have legal tender status. For this appraisal, focus is especially put on the interpretation of the notions ‘legal tender’, ‘banknotes’, and ‘coins’ referred to in Art. 128 TFEU; the analysis is supported by experiences drawn from the legal discussion in the United States.


A. Introduction
Since their emergence in 2008/2009, 'crypto-assets' or 'crypto-currencies' have attracted considerable interest in legal research.This is partly due to the fact that crypto-assets like Bitcoin are sometimes described as new, digital forms of 'money'; in this context, their economic function as money 1 as well as their overall effect on the economy are highly debated. 2 However, crypto-currencies are only one example of (potential) forms of money that do not possesslike coins and banknotesa physical manifestation; digital (or, one might say, intangible) forms of money have existed for a long time, the most prominent example being 'book money' commonly held in commercial bank accounts (hereinafter: commercial bank money).Among the more recent developments in the ambit of the 'digitisation' of money are initiatives of private companies to issue their own forms of digital 'currency'here, special reference is to Facebook's/Meta's attempt to create a digital currency called Libra/Diem 3as well as the debate on the introduction of socalled central bank digital currencies (CBDC).The introduction of CBDC is currently considered by central banks worldwide. 4However, important legal questions associated with the introduction of CBDC remain unresolved and need to be further discussed.
The present paper discusses different terminological aspects of proposed retail CBDC models against the background of the status quo in the Eurozone, compares them to incumbent forms of money and considers their introduction from a legal perspective.The paper is structured as follows: Part B provides an overview of the current discussion on the introduction of CBDC.Part C explains the terminology commonly used to described the different ways CBDC can be implemented.Part D discusses terminological ambiguities with regard to CBDC, especially highlighting the difference between tokenand account-based variants, and proposes a solution to distinguish between these two forms of CBDC more clearly.On this basis, Part E explores the introduction of CBDC from a legal perspective.Relevant questions include whether the ECB has the power to introduce a CBDC and whether this new form of money would have legal tender status.The analysis is supplemented by the discussion around CBDC and legal tender in the United states since the experiences in this jurisdiction are helpful to shed light on the aforementioned questions.

B. A brief overview of CBDC-related activities in the Eurozone and the United States
The introduction 5 of CBDC is actively considered in the Eurozone.In 2020, the ECB laid down its understanding and possible perspectives of a digital euro, focusing on a design of a 'digital euro for use in retail transactions available to the general public', 6 Report' (2022) 45-6 <https://www.federalreserve.gov/publications/financial-stability-report.htm>accessed 2 December 2022; see also, e.g.D Yermack, 'Is Bitcoin a Real Currency?An Economic Appraisal' in D Lee and K Chuen (eds), Handbook of Digital Currency: Bitcoin, Innovation, Financial Instruments, and Big Data, (Elsevier 2015) 31; S Ammous, 'Can cryptocurrencies fulfil the functions of money?' (2018) 70 The Quarterly Rev. of Econ.and Fin.38; S Dow, 'Monetary Reform, Central Banks, and Digital Currencies' (2019) 48 Int'l J. of Political Econ.153. 3 <https://www.diem.com/en-us/updates/stuart-levey-statement-diem-asset-sale/>accessed 2 December 2022. 4See, e.g.ECB, 'Report on a Digital Euro' (2020) <https://www.ecb.europa.eu/pub/pdf/other/Report_on_a_digital_euro4d7268b458.en.pdf> accessed 2 December 2022; Board of Governors of the Federal Reserve System, 'Money and Payments: The U.S. Dollar in the Age of Digital Transformation' (2022) <https://www.federalreserve.gov/publications/money-and-payments-discussion-paper.htm>accessed 2 December 2022; for an overview of several initiatives see Auer and others, 'Rise of the central bank digital currencies: drivers, approaches and technologies' (2020) BIS Working Papers No 880; see also <https://www.atlanticcouncil.org/cbdctracker/>accessed 21 April 2023. 5As there are already central bank (wholesale) accounts, digital central bank money technically already exists, cf as well as the potential role of intermediaries. 7In 2022, the ECB confirmed that focus is put on retail CBDC8 (CBDC that is available to the general public, see Part C) as well as the integration of intermediaries. 9Also, the ECB highlights that two transfer mechanisms will be further explored: first, transactions that are made online and validated by a third party ('online third-party validated solution') and second, peer-to-peer validation of offline transactions ('offline peer-to-peer validated solution'); 10 however, the first solution should not be delayed by the potential unfeasibility of the second. 11The ECB announces that it 'will review the overall design of a possible digital euro […], once all choices have been made', also hinting at a possible move to a realisation stage in the following. 12Nevertheless, this would not imply a decision on the introduction of a digital euro. 13In 2023, the ECB issued two additional progress reports, dealing with digital euro access, distribution and functionalities, 14 as well as the cost structure of the digital euro and further design options; 15 the ECB took the decision to move to the next project phase in October 2023. 16In parallel, the European Commission launched the initiative 'A digital euro for the EU'. 17In June 2023, the 'digital euro package' was published. 18The package contains proposals for a Regulation on the establishment of the digital euro (COM(2023) 369 final) and for a Regulation on the provision of digital euro services by payment services providers incorporated in Member States whose currency is not the euro (COM/2023/368 final).A related proposal (COM/2023/364 final) deals with the legal tender status of euro banknotes and coins.
In the United States, the Fed published a paper on CBDC in early 2022. 19While the Fed regards the U.S. payment system as 'generally effective and efficient', it is considering 'how a CBDC might fit into the U.S. money and payments landscape', thereby taking a 'wide range' of possible design options into account. 20Currently, the Fed plans to explore a CBDC that is 'privacy-protected, intermediated, widely transferable, and identity-verified' 21 while highlighting that a digital dollar should be available to the general public. 22At the same time, the Fed invited comments on the potential introduction of a U.S. CBDC. 23More recently, the White House's Office of Science and Technology Policy published a technical report on the possible introduction of a U.S. CBDC 24 and the Department of the Treasury issued a report on the future of money and payments. 25

C. Terminological approaches to CBDC
CBDC are generally defined as a digital form of central bank money. 26Apart from this baseline, a diverse terminology has developed to describe the various implementation models.On the one hand, one typically distinguishes between retail (or general purpose) CBDC and wholesale CBDC; retail CBDC is digital central bank money available to the general public, while wholesale CBDC would only be accessible to certain institutions. 27On the other hand, one distinguishes between token-based (or value-based) CBDC and account-based CBDC.The distinction between these two forms of CBDC can be looked at from different angles; typically, the literature relies on at least three criteria that are, naturally, interrelated and possess several overlaps: First, one can refer to the CBDC holder's legal position: account-based CBDC involve an 'account-relationship' between the account holder and central bank; such a relationship would not exist in a token-based system. 28Second, one can highlight the process of verification of payment and identification of the payer: while token-based money relies on the payee's ability to verify the validity of the payment object, account-based money depends on the ability to verify the account holder's identity. 29An account-based system implies that the user's holding would be recorded by a third party that would also determine the validity of transactions and update the respective balances; 30 in turn, a token-based system ('bearer CBDC') means that all payment devices would require users to validate their identities by the use of technical means. 31Account-20 ibid.8 (referring to problems of financial inclusion and cross-border payments, however), 13. 21See also Athanassiou (n 5) 209 (focusing on the finality of payments and the central banks' corresponding liability risks). 31ECB (n 4) 29-30; see also ibid.at 29 note 52 (highlighting that a 'bearer digital euro' would not necessarily have to be based on a DLT).
based systems would include both centralised issuance and settlement of the CBDC, whereas in case of token-based CBDC, the settlement leg could remain decentralised with a centralised issuance and destruction of CBDC units. 32The central bank would not offer custodial or transfer services for token-based CBDC, so that other commercial entities could step in to provide these services. 33Third, one can put emphasis on the storage of data: in an account-based system, the data are stored in a central register and transfers require an amendment of the register; in contrast, a token-based system also referred to as an '(electronic) note-based payment system'would store the data locally (e.g. in an app or on a card). 34In this light, token-based CBDC are often associated with a physical device that must be used to transfer the digital tokens. 35At the same time, CBDC tokens can be based on a blockchain/DLT solution.The decentralised circulation of CBDC tokens is often associated with the anonymity of payments. 36inally, one can distinguish single-tier and two-tier CBDC architectures, depending on whether a particular CBDC model involves intermediaries.Under a single-tier model, the central bank would be responsible for the ongoing management of the CBDC, interacting directly with the public. 37In contrast, under a two-tier model, the central bank issues and redeems the CBDC; intermediaries (such as commercial banks) would be entrusted with the distribution of the CBDC and corresponding payment services. 38However, the terminology varies; sometimes, this model is instead referred to as a 'hybrid model', the twotier form of CBDC ('synthetic CBDC') being understood as a liability which is issued by a commercial bank but at the same time fully backed with central bank liabilities. 39However, a 'synthetic CBDC' of this type would notfor the absence of a claim on the central bankconstitute a proper form of CBDC. 40D. CBDCs' conceptual issues: incumbent forms of money and the complicated distinction of token-and account-based CBDC I. On CBDC 'tokens' and 'accounts' The main varieties of CBDC are often analogised to existing forms of money: a tokenbased CBDC might be seen as analbeit digitalform of 'cash' and account-based CBDC might be seen as a form of central bank book money; with the involvement of intermediaries, CBDC might be compared to payments using commercial bank money. 41The distinction between money held in accounts (either commercial or central banks) and cash is indeed well established.Conversely, it has been observed that the distinction of token-and account-based CBDC is not as clear-cut as it might seem: In the first place, even if a token-based CBDC employs a form of DLT, the tokens and corresponding transactions arevery much unlike cashbased on and recorded in a ledger maintained by third parties, just like money in an 'account'. 42Besides, token-based CBDC will very likely not provide the same level of anonymity as cash. 43What is more, the level of protection against fraud and customer-service depends on the implementation of CBDC and does not constitute an inherent difference between CBDC 'accounts' and 'tokens'. 44hile the foregoing arguments do have their merits and shed light on important technological characteristics of CBDC and DLT in general, it is doubtful whether the distinction between token-and account-based CBDC necessarily 'breaks down under examination'. 45First, also the lines between long established forms of money can blur to a certain extent when looked at from a certain perspective or studied in certain situations.For instance, banknotes that are sent to the recipient by mail or delivery by a transport company are cash transactions, even though such transactions involve a third party; similar principles can be observed in connection with money remittance.Second, also cash payments that may have to be reported (and hence recorded) under applicable laws upwards a certain threshold remain cash payments. 46hus, the fact that cash transactions can have characteristics similar to transactions involving commercial bank money does not mean that these two forms of money should not be distinguished.On a conceptual level, there remains at least one difference that appears to be crucial for the distinction of CBDC 'tokens' and 'accounts' (and the different forms of money in general).This difference relates to a token-based CBDC's potential, depending on a corresponding technical implementation, to provide the token holder with a level of control over the tokens equivalent to the owner's physical power over banknotes or coins kept in her pocket; 47 this control is 'direct' inasmuch no intermediary like a commercial bank is needed to initiate and process transactions. 48While tangible tokens (paper, metal) have been the only way to allow a person to exercise direct control over money for the longest time, technological advances nowadays make an equivalent situationat least in theorypossible 41 Cf., e.g.Bindseil  for intangible tokens. 49At the same time, through this control, the token itself can be regarded as the monetary unit (or a multiple of it)and is not just a register entry documenting a monetary claim like in case of account-based systems.Within the realm of intangible tokens, one can distinguish between tokens that are blockchain/DLT-based and 'regular' tokens that are stored on physical media.

II. Blockchain-/DLT-based CBDC tokens
Blockchain-/DLT-based CBDC tokens enable the users' direct control because, given a corresponding technical implementation (that would typically require a high degree of decentralisation in the network), 50 there is no single intermediary that has the de facto power to decline a transaction in the network and thus would have to be trusted. 51From this perspective, the person who has the information (commonly called 'private key') needed to initiate a transactions directly controls the tokens52 notwithstanding the involvement of the countless network nodes. 53The opposite applies to money held in bank accounts that is analogised to account-based CBDC; here, the functioning of the payment system rests on the reliability of the intermediary insofar as this entity records and settles transactions.Hence, it seems that accountbased models are inherently connected to recording transaction in a ledger, whereas token-based models are not.However, on a closer look, this is not the case: transactions (also in 'fully decentralised') blockchain/DLT-settings are continuously recorded in a ledger just like transaction in account-based settings, as demonstrated by wellknown blockchain-networks like Bitcoin or Ethereum.The existence of a ledger where transactions are recorded is hence not an exclusive feature of account-based CBDC models.Rather, the difference lies in the way the ledger is kept and maintained.Against this background, it becomes apparent that blockchain/DLT-tokens possess characteristics of both cash and money in held in bank accounts: while the user's direct control makes them comparable to cash, the recording in a ledger as well as their intangibility make them comparable to bank accounts. 54In fact, tokens (as understood in the present context) exhibit a hybrid nature, possessing both characteristics of chattels and ledger entries. 55 crucial difference that distinguishes token-based CBDC and account-based CBDC can therefore be seen in the CBDC holder's direct control over ledger entries. 56For the concept of 'direct control', it seems necessary from a technical standpoint that the implemented ledger solution possesses a sufficient degree of decentralisation; if, in the most extreme case, only one entity (namely a central bank) fully controls the ledger, the ledger entries reflect traditional recording keeping rather than a user's direct control over CBDC.In such a case, the CBDC appears to be more comparable to bank accounts than to cash, even if the CBDC should be called 'tokens'. 57One could ask whether labelling such a model 'token-based' should better be avoided, as this potentially leads to confusion with regard to the concept of 'tokens'.A CBDC model with a central ledger where token balances are continuously recorded is in fact an account-based system. 58Hence, the aspect of 'direct control' presented before to distinguish between token-and account-based CBDC is connected to the level of decentralisation of the ledger infrastructure (number of network nodes). 59By contrast, the mere fact that third parties (network nodes) are involved in the process of confirming transactions should not be overstated.

III. 'Regular' CBDC tokens stored on physical media
As noted before, token-based CBDC are often conceptualised as data stored on a physical medium (e.g.card, smart phone).Under this model, the user's direct control of the CBDC tokens is 'indirectly' linked to the control of the physical storage medium, even though the device might have certain security features such as a password.60Such 'regular' digital tokens are inherently different from blockchain-/DLT-based tokens because they are stored on a single device while the latter are stored in a decentralised ledger.This has important consequences: the decentralised ledger infrastructure ensures that tokens cannot be copied at will; this technology was developed precisely to solve the double-spending problem. 61In contrast, 'regular' digital tokens can be, in principle, freely reproduced.This problem is by no means new and has occurred in earlier approaches to 'digital currencies' 62 but can also be observed in other contexts. 63However, this implies that tokens of this kind are different from cash because banknotes and coins cannot be copied at the owner's discretion.Technical means can be implemented to prevent copying but this does not change the token's inherent properties; furthermore, there remains the problem of circumvention of the technical barriers.In this light, it is questionable whether a CBDC based on tokens stored on physical media would be feasible without the involvement of an intermediary.While the transaction (e.g.copying the token to the payee's device and deleting it from payer's device) themselves might be decentralised (peer-to-peer), the system would likely require a certain type of ledger maintained by an intermediary (e.g.central bank); 64 in spite of the reproducibility of the digital tokens, the intermediary must be in the position to control the total amount of circulating digital units and, at the same time, validating who owns what amounts of digital units must be possible. 65Thus, to the extent tokens and transactions are recorded in a ledger under the control of the central bank (or another intermediary) to prevent double-spending, the model possesses features akin to account-based CBDC.

IV. The legal relationship between account holder and central bank
As highlighted before, the legal relationship between a CBDC holder and the central bank is frequently mentioned as a characteristic feature of account-based CBDC.This distinction mirrors the legal differences of cash and commercial bank money: only the latter is based on a contractual relationship between the account holder and the bank with a corresponding claim to the payment of the account balance in central bank money (cash); this implies that the account holder bears the commercial bank's insolvency risk.These principles do not translate well to account-and token-based CBDC: a claim that could be derived from an account-based CBDC would be a claim to exchange the CBDC balance for other forms of central bank money and not for other assets, like gold for instance. 66At the same time, it is quite possible that also token-based CBDC can be exchanged for other forms of central bank money.Since the debtor would be the central bank in any case, the insolvency risk associated with ('regular') commercial banks is not practically relevant. 67Furthermore, if a central bank were to emit tokens, it would need to safeguard the transferability of these tokensbe it by use of a DLT, physical devices or other technological solutionseven absent a direct contractual relation to the token holder because the emission of non-transferable CBDC-tokens would be a 62 P De Filippi and A Wright, Blockchain and the Law (Harvard University Press 2018) 18 et seq. 63Fairfield (n 49) 817 et seq. 64Cf.ECB (n 4) 30 ('It is important to note that the absence of a central third party that can block a specific user or counterfeit digital euro units substantially increases the impact of potential hacking with potentially disruptive consequences for the economy, including the possible unwarranted expansion of the monetary base'); ECB (n 8) 7, 9; see also BIS (n 27) 12 ('a centralised ledger could record only the total CBDC issued, with individual balances stored locally on a smartphone or card'); A Dumitrescu-Pasecinic, '"An offer they can't refuse": reflections on the mandatory acceptance of a digital euro banknote' (2021) 36 J.I.B.L.R., 249, 249-50. 65Cf.Filippi and Wright (n 62) 18-9.Corresponding issues cannot arise in connection with cash because it lacks endless reproducibility; clearly, however, there is the risk of counterfeit notes.See also on possible models of implementation Geva and others (n 41) 1141 et seq. 66 fruitless effort. 68In this light, the existence of an 'account-relationship' does not seem to be a criterion that is as compelling for the distinction of token-based and account-based CBDC as for the distinction of cash and commercial bank money.In this connection, it has been argued that the popular distinction between token-and account-based money 'is thus less a distinction between kinds or types of money, in any natural kind sense of those words, than it is between layers in the same money hierarchy associated with public and private obligees'. 69Absent intermediaries/commercial banks, the distinction between tokens and accounts becomes indeed less apparent.

V. Interim conclusion
The analysis has shown that token-and account-based CBDC can be distinguished by the criterion of the direct control of the CBDC holder.Hence, following this understanding, token-based CBDCthat, from a technical perspective, would generally have to be based on a decentralised blockchain/DLT network or a suitable physical device with the ability to prevent double-spending to guarantee direct controlindeed possess important features of cash, while account-based CBDC would be akin to money recorded in bank accounts due to the reliance on intermediaries.However, these similarities do not, by themselves, mean that token-based CBDC can be regarded as cash or that accountbased CBDC can be qualified as central bank accounts from a legal perspective.Whether this is case must be assessed with reference to the applicable laws; the following takes a closer look at this question.As will be shown, the aspect of direct control indeed plays an important role for the legal appraisal.

I. General remarks
The introduction of the CBDC raises two separate legal questions that should be distinguished. 70The first question relates to the introduction of digital central bank money itself: Does the central bank (or possibly, other authorities) have the power to introduce a particular form of a CBDC? 71 The second question relates to the legal qualification of a CBDC, especially with regard to its legal tender status.Yet, both questions are interrelated insofar as they imply the appraisal whether a particular form of CBDC falls within the concepts contained in the law as it stands or whether legislative amendments are required.This task is far from trivial, especially since the monetary laws relevant for the present purposes (still) often have (or, at least, originally had) physical forms of money in mind.Therefore, it might be doubtfuleven if a certain form of CBDC functionally corresponds to an incumbent form of moneywhether the existing laws cover the introduction of such a CBDC.At the same time, however, it cannot be denied that money, in general, has long been regarded as being dissociated from physical tokens. 72I.Legal background of money 1.The concept of 'money' From an economic perspective, 'money' is generally defined by three main characteristics: it functions as a means of payment, as a unit of account and a store of value. 73From a legal perspective, the term 'money' has not received a uniform definition.Whereas assets like commercial bank money and bitcoins might be understood as 'money' in certain contexts, the same might not be true in other contexts; here, it is important to distinguish economic and legal concepts, while there also exist different conceptions of 'money' also in the legal sense.Thus, what can be considered as money depends on the context one is referring to (e.g. law of contracts, property, tax law or constitutional law). 74For instance, the Uniform Commercial Code (UCC) contains a special definition of 'money'. 75The act addresses bank deposits and collections as well as funds transfer in its Art. 4 and Art.4A.Furthermore, important rules on electronic fund transfers are contained in the Electronic Funds Transfer Act of 1978. 76In the EU, an important instrument of secondary law dealing with the different forms of money is the PSD II; 77 this directive is fundamentally based on the definition of 'payment transactions' (Art.4(5) PSD II) which in turn rests on the definition 'funds' (Art.4(25) PSD II) which means 'banknotes and coins, scriptural money or electronic money'.The E-Money-Directive II lays down the conditions for the activity of issuing 'electronic money'. 78n a general level, one can distinguish between central bank money, commercial bank money and nonbank money. 79While the legal assessment of the different types of money can vary according to the applicable private law, commercial bank money is generally understood as a claim against a bank, typically not entailing a property right in specific physical banknotes or coins. 80In contrast, central bank money is generally defined as a liability of a central bank (Fed, ECB). 81Both in the U.S. and the Eurozone, central bank money exists in the form of accounts at the central bank and physical currency (banknotes and coins); while the first is only available for certain institutions (especially banks), cash 73  can be used by the general public. 82Despite the 'direct' involvement of the central bank, it should be noted that central bank money is notneither in the U.S. nor the Eurozonesynonymous with the concept of legal tender.As will be seen, central bank money can (and very often is) legal tender but that does not have to be the case; this is illustrated, e.g. by accounts held at the ECB that do not join legal tender status (cf.Art 128 TFEU). 83From a conceptual point of view, a legal system might also decide to confer legal tender status on ('private') forms of money that do not entail a liability of the central bank or a liability against anyone at all. 84To be clear, however, this is currently the case neither in the Eurozone nor the United States.
2. Money and constitutional rules 85 Art.3(1)(c) TFEU grants the Union the exclusive competence in the area of 'monetary policy for the Member States whose currency is the euro'. 86For being an exclusive competence, Member States may not enact legislation in this area (even absent legislation on the level of the Union), unless so empowered by the Union or for purpose of implementing Union acts (Art.2(1) TFEU). 87With a view to Art. 127(1) and Art.282(2) TFEU, the ECJ has held that the primary objective of the Union's monetary is to maintain price stability. 88In order to determine whether a measure falls within the area of monetary policy, the court generally refers to the objectives of that measure. 89Art.128 (1) TFEU (ex 106 EC) provides that the ECB has the exclusive right to authorise the issue of euro banknotes in the EU; the ECB and national central bank may issue such notes.Banknotes issued accordingly are the only banknotes that enjoy legal tender status. 90urthermore, Member States may issue euro coins while the volume of the issuance is subject to approval by the ECB (Art.128(2) TFEU).According to the Supreme Court's case law, the U.S. Constitution gives Congress wide discretion in monetary affairs. 92Somewhat surprising in light of the fundamental importance of the issue for the U.S. financial system, the reach of the Congress's power in this area has not always been uncontroversial, however.A string of casesoften referred to as the 'legal tender cases' 93dealt with the question whether Congress had the right to declare paper money legal tender.The Supreme Court eventually answered in the affirmative; 94 yet, while the conclusion reached by the court can be considered as generally accepted today, 95 the issue has not been entirely put to rest in the legal literature, as shown by critical publications that emerge from time to time. 96One explanation might be that the issue relates to fundamental questions on the interpretation of the U.S. Constitution itself. 97The Federal Reserve System is not established by the U.S. constitution but in the Federal Reserve Act. 98

The concept of 'legal tender'
The concept of legal tender possesses importance for the present purposes insofar as both the ECB and the Fed are studying the implications of CBDC that would have legal tender status. 99On a general level, legal tender status is usually defined with regard to a debtor-creditor-relation: by using legal tender, a debtor can validly discharge of her monetary obligation. 100This principle does not necessarily mean that legal tender is the only way to extinguish a monetary obligation, as there might other means of payments the law recognises for this purpose; however, legal tender is the means of payment that the creditor must accept. 101Thus, legal tender can generally be understood as the form of payment the debtor can choose to provide to her creditor.Yet, the concept legal tender possesses several more detailed nuances on a closer look.On the most basic level, one can ask what forms of money are recognised as legal tender.For instance, while banknotes and coinsimportant forms of central bank moneyare recognised as legal tender in many jurisdictions, money held in central bank accounts generally 102  On a more subtle level, one can ask what kind of obligations can be discharged by using legal tender. 104The most obvious way to create a monetary obligation might be a contract: one party promises to provide the other party with money.Since the basis for this obligation is a contractual nature, private law doctrines apply and the law can employ different legal mechanism to make creditors comply with the obligation to accept legal tender. 105Other forms of monetary obligations are created by order of the government, the most straightforward example being tax liabilities.Sometimes, the currency in which taxes are paid are distinguished from legal tender, being referred to as 'functional currency'. 106Finally, the law can stipulate exceptions to the legal tender status, i.e. cases in which the creditor is not obliged to accept legal tender. 107he most common forms of legal tender are banknotes and coins, i.e. physical forms of money. 108This is reflected by U.S. law, stating that 'United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues.Foreign gold or silver coins are not legal tender for debts'. 109On the other side of the Atlantic, Art.128(1) TFEU states that the 'banknotes issued by the European Central Bank and the national central banks shall be the only such notes to have the status of legal tender within the Union.'While Art 128(2) TFEU does mention euro coins, it does not provide for legal tender status; rather, the legal tender status of euro coins is based on Art.11 Council Regulation (EC) Nr. 974/98. 110Thus, EU law regulates the legal tender status of banknotesunlike U.S. lawon the constitutional level, while the legal tender status of coins is based on secondary law. 111Conversely, there is no provision in EU law that declares commercial bank money legal tender status; 112 the same applies to electronic money.However, this does not mean that monetary debts cannot be discharged with commercial bank money at all in the Eurozone.In fact, the wording of Art.128 TFEU was chosen precisely to provide the Member States with some leeway to allow for other means to extinguish such a debt. 113A frequently cited example is Dutch law with regard to commercial bank money. 114Therefore, in principle, one must look at the private law of the Member States whether commercial bank money or other forms of money can lawfully be tendered to the creditor of a monetary debt.This does not contradict the concept of legal tender because a debtor has, based on EU law, the option to rely on cash to discharge of her debt; in principle, the laws of a Member States can, however, provide her with further options to do so.
As for the types of debts that can be paid off by using legal tender, 31 U.S.C. § 5103 provides for a wide understanding, generally referring to 'all debts', 'public charges' and so on.Accordingly, it appears that the legal tender status refers to both monetary debts that derive from private law, as well as those that stem from public law (like taxes, for instance). 115The language of the EU law is less clear in this respect: Despite its fundamental importance, both Art.128 TFEU and Art.16 ESCB/ECB Statute refer to 'legal tender' without further specifying this concept; the situation is similar with regard to secondary law. 116Thus, EU law regulates what legal tender is (banknotes and coins) but does not specify what legal tender means; from the language of the law, it is unclear what kind of monetary debts can be settled by using legal tender, or if the European concept refers to a debtor-creditor-relation in the first place.The ambiguities in EU law as to the term 'legal tender' caused the European Commission to issue a recommendation in 2010. 117According to the recommendation, the term 'legal tender' entails three elements: (i) mandatory acceptance, meaning that the creditor of a payment obligation cannot refuse euro banknotes and coins (unless the parties have agreed on another means of payment), (ii) acceptance at full face value, meaning that the monetary value of euro banknotes and coins is equal to the amount indicated on these notes and coins, and (iii) power to discharge from payment obligations, meaning that a debtor can discharge himself from a payment obligation by tendering euro banknotes and coins. 118In 2021, the ECJ confirmed important parts of the Commission's approach to the concept of legal tender. 119Referring to its 'ordinary sense', the court understood legal tender as a means of payment denominated in a currency unit that 'cannot generally be refused in settlement of a debt denominated in the same currency unit, at its full face value, with the effect of discharging the debt'. 120It follows from the ECJ's ruling that legal tender can be used to pay off debts of both a private law and public law nature. 121he question of exceptions to the legal tender status entails several sub-issues that should be distinguished.First, it should be noted that the legal tender status of a means of payment does not necessarily imply that a person must in fact accept this means of payment for goods or services she offers.In this vein, the U.S. Department of the Treasury states that 'there is no federal statute which mandates that private businesses must accept cash as a form of payment.Private businesses are free to develop their own policies on whether or not to accept cash unless there is a state law which says otherwise.' 122 Thus, on the one hand, the parties of a transaction are generally 115 See also Chung (n 73) 113-4. 116Freitag (n 100) 610. 117 free to agree to exchange goods for other goods or services.Since in this case the parties do not agree on a monetary debtno money is owed 123 -, such a transaction in fact does not concern the concept of legal tender and, therefore, does not, in a strict sense, concern an exception to the legal tender status of cash.On the other hand, the parties may agree to settle a monetary debt with forms of money that do not possess legal tender status.A practically relevant case is the (implicit or explicit) agreement to pay the debt with commercial bank money.As the parties want to exclude the payment of cash, an agreement of this kind may be understood as a contractual limitation to legal tender status of cash, the permissibility of which depends on the applicable law. 124While this question was not explicitly addressed by the ECJ in Dietrich and Häring, there should be no doubt that, from the perspective of EU law, the parties can freely agree on a monetary debt that can be settle with commercial bank money. 125owever, in reference to the recommendation of the Commission mentioned above, the ECB states that retailers must provide a 'legitimate excuse' when refusing cash payments. 126According to the author's opinion, this should not be understood as a limitation to the parties' freedom to agree on non-cash payments; rather, a 'legitimate excuse' (a justification) is necessary in absence of an agreement to this effect. 127In this connection, the applicable private laws might very well consider labels or posters displayed by the retailer as a sufficient basis for the (at least implicit) contractual exclusion of cash payments. 128As a general observation, one might wonder why the ECB (and the Commission in its recommendation) put their focus on the retailer-consumer relation when describing the concept of legal tender; why must exactly retailers provide an excuse for refusing cash payments, while other situations are not addressed (e.g.C2C payments)?Although consumer protection has an important position in EU law (cf., e.g.Art. 12, 169 TFEU), there is no indication that Art.128 TFEU specifically aims at regulating the dealings of retailers or protecting consumers. 129Admittedly, however, payments between retailers and consumers are among the most relevant examples for the continuing popularity of cash payments (at least in some EU Member States).
A different question is whether the law itself limits the effects of the legal tender status, i.e. obliges a party to accept something other than legal tender for the payment of a monetary debt.In the EU, this also implies the question to what extent the Member States may 123 Failure to comply with a contractual obligation might ultimately still lead to a monetary claim (especially for damages). 124The law might also provide for express rules that cash payments must not be declined.As for the U.S., it has been reported that some municipalities, for instance, have prohibited certain businesses from refusing cash, see Bossu and others (n 5) 33 note 78. 125 is clear from the foregoing that, as EU law currently stands, the concept of legal tender as regards banknotes and coins must be understood as entailing an obligation in principle for the creditor of a payment obligation to accept banknotes and coins, unless the contracting parties exercise their contractual freedom to agree on other means of payment, or unless the legislation adopted by the Union or by a Member State in exercising their respective competences […]') (emphasis added); see also Loosveld (n 112) 302; M Miernicki, ''Recht auf Barzahlung' -Zum Verbot der Begleichung von Rundfunkgebühren mit gesetzlichen Zahlungsmitteln' (2021) Zeitschrift für Finanzmarktrecht 229, 230. 126ECB, 'FAQ on cash' <https://www.ecb.europa.eu/euro/cash_strategy/html/cash-faq.en.html> accessed December 2 2022 ('The retailer must provide a legitimate excuse, such as a difficulty maintaining sufficient cash reserves to provide change or concrete physical security risks due to the presence of large amounts of cash'). 127See E.IV.4.below. 128See, however, ECB (n.134) ('Displaying a label or posters indicating that the retailer refuses payments in cash, or payments made in certain banknote denominations, is not enough').Cf. also Art. 10 COM(2023) 369 final (prohibiting the 'unilateral exclusion' of digital euro payments; this slightly misleading expression means that, inter alia, a contractual (bilateral) agreement to exclude such payments must be 'individually negotiated'). 129Cf. also R Freitag in M Artz and others (eds), BeckOGK BGB § 244 [33] (updated 1 April 2020).
provide for rules of this kind.In Dietrich and Häring, the ECJ held that the legal tender status of euro notes and coins is not absolute and leaves room for the Member States to introduce exceptions (e.g. a monetary debt that can only be paid off with commercial bank money), provided they are duly justified. 130inally, it should be noted that the concept of legal tendervery much like the concept of moneydepends on the context it is used in.So far, reference has been made to the concept of monetary laws as well as their implication for contractual obligations.However, the term of legal tender can also be relevant, e.g. in the context of tax law.This is illustrated by the ECJ's decision in Hedqvist, where the court deemed bitcoins 'legal tender' within the meaning of Art.135(1)(e) VAT-Directive, 131 mainly because it 'has no other purpose than to be a means of payment and that it is accepted for that purpose by certain operators'. 132This deserve two immediate remarks: First, the decision only applies to the specific tax law context in which it is handed down; in the context of EU monetary law, bitcoins are not certainly not legal tender in the Eurozone (and the same applies to the U.S.). 133Second, at least from today's perspective, the premise of the ECJ's decision must be questioned.This is because it is nowadays widely acknowledged that bitcoins (as well as many other crypto-assets) do have a purpose other than being used as a means of payment, namely their use as an object of speculation. 134hus, one might doubt if it is correct to say that bitcoins have 'no other purpose than to be a means of payment'.Whether this observation would have caused the ECJ to rule differently in Hedqvist is, of course, another matter.

III. CBDC as a form of central bank accounts
As noted, central bank accounts are, for the time being, generally not available to the public.U.S. law enumerates several entities that are eligible for such accounts, 135 e.g.U.S. depository institutions. 136Thus, as summarised by the Fed, the 'Federal Reserve Act does not authorise direct Federal Reserve accounts for individuals, and such accounts would represent a significant expansion of the Federal Reserve's role in the financial system and the economy'. 137In other words, providing retails retail access to Fed accounts requires additional legislation. 138In the Eurozone, Art. 17 ESCB/ECB Statute states that, in order to conduct their operations, 'the ECB and the national central banks may open accounts for credit institutions, public entities and other market participants and accept assets, including book entry securities, as collateral.'Whether retail access to central bank accounts is compatible with the law as it stands hence depends on the meaning of the term 'other market participants'; if one understands a consumer to be a 'market participant', the law would, in principle, support the introduction of retail accounts. 139The wording, even though not entirely unambiguous, seems to refer to financial market institutions and not the general public or households, however. 140ne can also observe that the provision does not refer to the 'public' as such. 141The ECB's understanding is somewhat unclear: on the one hand, the ECB considers Art.127 (2) TFEU in connection with Art. 17 ESCB/ECB Statute as a legal basis for the introduction of a digital euro available to households and other private entities; at the same time, the ECB states that this 'cannot serve as the sole legal basis'. 142On the other hand, the ECB mentions Art.127(2) TFEU and Art. 17 ESCB/ECB Statute (as well as Art.20, 22 of the same statute) when referring to 'the issuance of digital euro variants for limited uses, devoid of general legal tender status'. 143Thus, it seems that the ECB's opinion is as follows: While the introduction of retail central bank accounts is not as such prohibited by primary law, 144 conferring legal tender status (and possibly also retail access) to such a form of money would require further legislation.In this light, the ECB's opinion is in line with a purely textual reading of Art. 17 ESCB/ECB Statute, whereas certain doubts about the meaning of the expression 'other market participants' remain.
It should be noted that the question who can open an account with the central bank is not the only issue to be considered when discussing account-based retail CBDC.Even if existing provisions of U.S. or EU law were to be expanded to expressly include households or private entities, one would have to verify whether a certain form of CBDC fulfils the other requirements of these provisions.After all, Art. 17 ESCB/ECB Statute allows the ECB to 'open accounts'; 12 U.S.C. § 342 refers to 'deposits'.In other words, one must not only ask whom the central bank may offer its services but also what it may offer.This is a relevant consideration in light of the various different models for the implementation of CBDC.Consider, for instance, a CBDC design where private users cannot directly access their CBDC accounts with the central bank but need to rely on the services of (new or incumbent) intermediaries; some proposals of CBDC are built around a ledger maintained by the central bank that only records anonymous balances while further data 138 Crawford and others (n 42) 171. 139In this connection, one would also have to ask what kind of assets could be offered by consumers as collateral within the meaning of Art. 17 ESCB/ECB Statute (see also Art. 18 is within the control of intermediaries. 145Since this way of maintaining 'accounts' appears to be different from existing forms of central bank accounts, it might be unclear whether such CBDC models actually involve 'accounts' within the meaning of the law as it stands. 146The foregoing implies that an analysis is necessary if a given CBDC design fits within the meaning of the current statutory understanding.Should a particular CBDC design not clearly be covered by this understanding, an amendment of the law should, for the sake of legal certainty, not only expressly mention the accessibility of private entities but also the admissibility of the new form of central bank money. To a certain degree, the present questions mirrors distinction between token-or account CBDC.As implied earlier, the mere fact that CBDC balances are referred to as 'tokens' should not rule out the existence of an 'account' within the meaning of a provision like Art. 17 ESCB/ECB Statute.Moreover, it is doubtful whether a very narrow reading of a provision of this kind is warranted since this might confine the options of central banks to flexibly respond the technological or economic developments.Nevertheless, CBDC that take the form of blockchain-/DLT-based tokens or of 'regular' tokens as described above would only uneasily satisfy the requirements for an 'account'. 147This is because, on the one hand, offering accounts typically implies that the central bank has the power to update the account balances and this is not the case for blockchain-/ DLT-based tokens (at least if they are based on a 'fully' decentralised architecture); here, the central bank would rather provide a technical infrastructure, while the power remains with the token holder.On the other hand, accounts imply that transactions are continuously recorded in a ledger which is not (necessarily) the case for 'regular' tokens stored on a physical media.
IV. CBDC as a form cash 1.The broad interpretation of the U.S. 'Coinage Clause' and the ambiguous meaning of Art.128 TFEU It is common knowledge that the use of cash as a means of payment is not restricted to a particular group of persons.Thus, different from what was discussed above in connection with central bank accounts, it is not problematic whether a CBDC that can legally be regarded as cash may be accessible to the general public.Rather, the crucial issue boils down to under what circumstances a CBDC in fact can be regarded as cash under the law as it standsor, put more generally, whether the same rules that apply to cash can also be applied to a certain form of CBDC.For this appraisal, two basic scenarios are conceivable.If one can establish that a certain rule of monetary law refers to physical things (chattel), 148 thereby following a rather formalistic approach, the application of that rule to CBDC is not warranted at the outset.Conversely, if it is found that rule can be interpreted in a more flexible manner allowing for a functional reading, applicability will depend on a functional comparison of traditional forms of cashthat were known at the time of rule's enactmentand the CBDC design in question.With regard to the U.S. constitution, some have argued in support of a narrow reading of the Coinage Clause.In the nineteenth century, Justice Field stated in his dissent in Juilliard v Greenman: The clause to coin money must be read in connection with the prohibition upon the States to make anything but gold and silver coin a tender in payment of debts.The two taken together clearly show that the coins to be fabricated under the authority of the general government, and as such to be a legal tender for debts, are to be composed principally, if not entirely of the metals of gold and silver.[…] When the Constitution says, therefore, that Congress shall have the power to coin money, interpreting that clause with the prohibition upon the States, it says it shall have the power to make coins of the precious metals a legal tender, for that alone which is money can be a legal tender.[…] Now, to coin money is, as I have said, to make coins out of metallic substances, and the only money the value of which Congress can regulate is coined-money, either of our mints or of foreign countries. 149ile this interpretation is based on both textual and systematic arguments, it might be seen as formalistic insofar as it defines the forms of money covered by the Coinage Clause with reference to the material it is made of: metallic substances or precious metal.However, via the limitation to metal tokens, Justice Field also highlights a functional aspect.This aspect is expressed as the 'standard of value'-function of money that, according to his reasoning, cannot exist in things that do not have intrinsic value. 150While it can be questioned whether or to what extent only things that possess intrinsic value can function as a standard of value, this approach reveals a crucial point that is also relevant for the current purposes: it is not enough to ask the general question if a certain form of CBDC is comparable to cash (coins) in one way or another.Prior to this assessment, one must determine the characteristics of cash that are actually relevant for the provision in question; then, as a second step, one can determine whether another form of money has equivalent characteristics.The prevailing view in the United States on the Coinage Clause seems to be that the aspect of intrinsic valuewhich is an important characteristic of precious metalsis not a crucial feature of 'money'.Otherwise one could not reach the conclusion that paper money could be covered by the Coinage Clause because the paper's intrinsic value is negligible.Likewise, a (token-or account-based) CBDC does not have intrinsic value like precious metals.Thus, from this perspective, there are good arguments for treating CBDC like paper money under the U.S. Constitution's Coinage Clause.
At first sight, Art.128 TFEU's wording appears to be, compared to the U.S. Coinage Clause, 151 broader because it expressly addresses both coins and banknotes; thus, there can be no doubt that banknotes are covered by the provision.However, at the same time, the wording is limited 152 insofar as it refers exclusively to two forms of money that have traditionally been represented by physical tokens. 153Hence, two questions for the introduction of CBDC arise: first, can a banknote or a coin be of a non-tangible nature?Second, provided that physical tokens are not required, would a particular CBDC design qualify as a banknote or a coin under the TFEU?
With regard to the first question, it can be argued, thatbased on the plain meaning of the words -'banknotes' and 'coins' do not cover any type of CBDC. 154ccording to this line of argumentation, a physical token made of paper, metal or comparable materials is a necessary requirement for banknotes and coins within the meaning of Art.128 TFEU.However, other commentators reject a pure literal understanding of the treaty and apply a functional reading. 155The ECB states that 'if the digital euro were to be issued as an instrument equivalent to a banknote, then the most expedient legal basis for its issuance would be Art.128 of the TFEU in conjunction with the first sentence of Art.16 of the Statute of the ESCB'. 156Again, the discussion comes down to what the relevant features that banknotes (and coins) are that must be compared with a particular CBDC design.In this connection, it is argued that a CBDC would have to be 'functionally 100% equivalent to the existing cash, to say the least'. 157This would imply that the CBDC would have to be a) issued subject to the authorisation of the ECB, b) denominated in euro, c) useable without disclosing or identifying its owner, d) transferable without involving an intermediary and additional costs, e) a permanent storage of value that is unlimited in volume, f) accepted by all government entities. 158 Denomination, intermediaries, and 'additional costs' Without doubt, a digital euro 'banknote' would have to be denominated in euro and function as a storage of value.However, the other enumerated functionalities of banknotes deserve a closer analysis.With regard to point d) referenced above, it is one of the core features of decentralised DLT-networks that one does not has to rely on an intermediary to carry out transactions.The holder controls her assets directly anddifferent to 'regular' datathe tokens cannot be copied at will.159 For that reason, 'crypto-currencies', 'blockchain-tokens' and the like are often compared to cash.160 Thus, if a CBDC in question possesses these characteristics, it is reasonable to considered them equivalent to traditional forms of cash, at least from this perspective.161 This would apply to blockchain-/ DLT-based tokens as described above, but potentially also to 'regular' tokens stored on physical media provided there is an effective technical solution to prevent double-spending while maintaining the user's direct control of the tokens.This argument is not called into question by the 'additional cost' argument since this is not an exclusive feature of cash: if a person goes to her favourite restaurant around the corner, the cash payment will be fast and practically cost-free.However, what if a company located in Athens wants to use its legal tender tokens to pay a Parisian contractor?162 Transferring cash from Athens to Paris is both slow and comparatively expensive, as one would have to physically move the money to the location of payment, very likely by relying on third parties (especially postal services or money remittance providers).In fact, using blockchain-/DLT-based CBDC would most likely bein view of the costs alonea more reasonable decision for the company, and would hence be even less costly than the cash alternative.163 The point here is not claim that CBDC are always the more reasonable way of making payments; rather, it should be highlighted that the characteristics of cash as well as the advantages and drawbacks of this means of payments depends on the context one looks at.As a consequence, it is doubtful whether the involvement on intermediaries and the existence of 'additional' costs is a useful criterion for the present purposes.

Privacy of payments
Whether anonymity can or should be guaranteed by CBDC designs has been analysed from different angles, often times with the express concern that the new form of money might be used for illicit purposes (especially money laundering and terrorist financing). 164As many people are concerned about their privacy, this is not merely a technical or legal question but also one of fundamental importance for the general public's practical acceptance of a potential CBDC.Nevertheless, both the Fed and the ECB have made clear that 'full' anonymity is not an option. 165In this light, the equivalence of CBDC and cash is questioned already at the outset.Indeed, the ability to make anonymous payments is generally closely linked to cash.However, is anonymity 166 an inherent feature of cash payments?In fact, there is nothing stopping lawmakers from requiring every cash payment to be recorded and every payer's identity to be verified. 167After all, there is nothing that would prevent lawmakers from granting completely anonymous access to commercial bank money too.It seems relatively clear that neither of these two options would be desirable, but this is not the point.What is crucial from the legal point of view is that anonymity is not an inherent feature of neither cash nor commercial bank money (nor tokens recorded in a decentralised ledger) 168 but rather a policy choice. 169This is demonstrated by laws that require notification of cash payments upwards a certain threshold. 170The law might evenquite contrary to the legal tender statusprovide for an outright ban on cash payments of a certain size, 171 legislation of the kind that has been proposed by the European Commission. 172Hence, anonymity is, again, a matter of perspective; the fact that the law might require a cash payer to verify her identity and record the transaction or even forbid certain transactions does not cause the banknotes or coins transferred to cease being banknotes or coins.What much 'anonymity' discussion seems to refers to is instead the user's direct control of the tokens.This used to be an inherent feature of physical tokens but can nowadays, as explained, be replicated by technology for digital tokens. 173There is, conversely, nothing inherent to cash payments that would require them to be legally anonymous.Thus, while anonymity is a very important aspect for the implementation of CBDC, it isfor the purposes of the present appraisalnot an inherent feature of banknotes or coins.What is more, technical ways of implementation that allow for anonymity are actively considered, as so-called 'anonymity vouchers' would potentially provide a certain level of anonymity for low-value payments. 174Depending on the specific implementation, this might lead to a situation similar to cash, where some transactions are, from a legal perspective, 'fully' anonymous and some transactionsusually those of a certain sizethat are not.In conclusion, the issue of anonymity does not, as such, rule out digital forms of banknotes or coins.
4. Issuance, acceptance and legal tender status Point a)issuance subject to the authorisation of the ECBand f)acceptance by all government entitiesreferenced above might surprise at first glance.This is because they seem to describe legal consequences of the fact that something 'digital' qualifies as a 'banknote' rather than exploring the concept of 'banknote' itself.A conceptually similar line of argument also refers to the status of cash as legal tender: declaring CBDC 'banknotes' would 'automatically' lead to their status as legal tender; 175 as a consequence, due to the legal tender's ability to discharge of debts, 176 creditors of a monetary debt would be obliged to accept CBDC which, in turn, would put on them 'the obligation to use electronic technology'. 177Arguments of this kind should not be dismissed merely because that there is no clear distinction between definition ('banknote', 'coin') and legal consequence (legal tender status) since it seems hardly possible to fully separate the concept of these forms of money from their legal tender status.Rather, the legal tender status was conferred upon cash with the traditional concept of banknotes and coinsa physical piece of paper, metal or similar materialin mind, i.e. something that can in principle be transferred without any technical equipment or expertise.This calls the legality of digital cash into question.However, it could still be argued that digital banknotes and coins are compatible with the notion of legal tender.This is because the notion of legal tender is not absolute. 178In the present context, this refers to the question under what circumstances a creditor may refuse cash even absent a contractual agreement on a non-cash payment.The private laws of the Member States might very well come to the conclusion that a creditor of a monetary debt maydespite a potential digital banknote's or coin's legal tender statusrefuse payment in digital legal tender tokens under circumstances in which the opposite would be considered as unacceptable. 179This might be found as long as payments in CBDC are not widespread and the implementation costs for using CBDC are high.Thus, the legal tender status of a CBDC does not necessarily imply the general 'obligation to use electronic technology'.Yet, the Member States' laws will likelyat least in questions of detaildiffer on this matter. 180ence, while digital banknotes are, in principle, compatible with the TFEU's notion of 'banknotes', the complications introduced by their 'automatic' legal tender status casts some doubts on whether Art.128 TFEU supports the introduction of a digital 'banknote'. 181At the very least, there exists some legal uncertainty that is not conducive to a smooth introduction of a digital euro.A solution for this problem might lie in the introduction of a digital banknote while at the same time further specifying its legal tender status in an act of secondary law, 182 thereby addressing concerns associated with 'the obligation to use electronic technology'.This act could, for instance, provide for a general obligation to accept the CBDC only when the necessary equipment is readily available. 183Governments of the euro zone Member States should, in contrast, generally be obliged to accept payments (e.g. based on tax law) and provide the necessary infrastructure for this purpose.Indeed, the Commission has proposed legislation that, among other topics, further specifies and limits the obligation to accept a potential digital euro. 184Additionally, further rules would be necessary with regard to denomination, specification and related issues. 185 Distinguishing 'coins' and 'banknotes' Having established that digital forms of cash can bedepending on the technical implementationfunctionally equivalent to physical forms of cash, the question remains how to distinguish between the latter.In other words, would a CBDC be a digital 'banknote' or a digital 'coin'?This issue especially pressing for EU law, as Art.128 TFEU clearly distinguishes between these two forms of central bank money.186 However, both banknotes and coins are based on physical tokens and both have a constant face value.187 One obvious, albeit merely formal, distinction refers to the denomination of banknotes and coins.188 Yet, the denomination is based on secondary law 189 and it is questionable whether one can use these instruments to interpret primary law.190 What is more, this would mean that Art.
128 TFEU contains a flexible concept of banknotes and coins that can be changed at any time, there 'delegating' the task of defining banknotes and coins to secondary law.It is doubtful whether this is really the case.
Rather, Art.128 TFEU should be understood as mirroring the historical development of money: among the first types of money were coins made of precious metals; later, paper money was introduced. 191Both forms of money rely on physical tokens and can have varying denominations, but the crucial difference is that coins consist of tokens that have intrinsic value: 192 the metal that coins are made of possesses value in and of itself, simply because the copper, steel and so on canin principle 193 be used for different purposes regardless of whether it is also minted to become a form of money. 194In contrast, the pieces of paper that are imprinted to become banknotes do not, practically, have any value if they had not been declared banknotes.Thus, Art.128 TFEU can be read to functionally distinguish two forms of money that are both embodied in physical tokens: One form of money that consists in tokens with intrinsic value and another form of money that consists in tokens that lack said value; the latter are called banknotes, the former coins. 195In application of this reading, neither printing 'paper coins' nor minting 'golden banknotes' 196 would be compatible with Art.128 TFEU.At the same time, datasets, tokens etc that would be used for 'digital cash' lack intrinsic value; 197 this also applies to crypto-assets like Bitcoin. 198These thoughts lead to the conclusion that CBDC tokens (that likewise lack intrinsic value) would constitute, from a legal perspective, banknotes rather than coins. 199ustrian National Bank's (OeNB) Jubiläumsfonds.A preliminary version of the article was published at https://law.stanford.edu/publications/no-95-cash-accounts-and-central-bank-digital-currenciesa-transatlantic-view-on-the-digitization-of-retail-central-bank-money/.
See, e.g.JJ Chung, 'Money as Simulacrum: The Legal Nature and Reality of Money' (2009) 5 Hastings Bus.L. J., 109, 111 et seq.; Dow (n 2) 153.See for a detailed account Proctor (n 72) 7 et seq.74Cf.Bossu and others (n 5) 8.75UCC § 1-201(b)(24); according to this provisions, money 'means a medium of exchange currently authorized or adopted by a domestic or foreign government.The term includes a monetary unit of account established by an intergovernmental organisation or by agreement between two or more countries'. 76b.L. No. 95-630, 92 Stat.3641; see especially 15 U.S.C. § 1693 et seq. 77rective (EU) 2015/2366 of the European Parliament and of the Council of 25 November 2015 on payment services in the internal market [2015] OJ L 337/35. 78rective 2009/110/EC of the European Parliament and of the Council of 16 September 2009 on the taking up, pursuit and prudential supervision of the business of electronic money institutions [2009] OJ L 267/7; according to Art. 2(2), electronic money 'means electronically, including magnetically, stored monetary value as represented by a claim on the issuer which is issued on receipt of funds for the purpose of making payment transactions as defined in point 5 of Art. 4 of Directive 2007/64/EC, and which is accepted by a natural or legal person other than the electronic money issuer.' 79 Board of Governors of the Federal Reserve System (n 4) 25-6.80Cf.Bossu and others (n 5) 8, 12. See also J Cheng and J Torregrossa, 'A Lawyer's Perspective on U.S. Payment System Evolution and Money in the Digital Age' (FEDS Notes, 2022) <https://www.federalreserve.gov/econres/notes/fedsnotes/a-lawyers-perspective-on-us-payment-system-evolution-and-money-in-the-digital-age-20220204.html>accessedDecember 2 2022.81Thisdoes not necessarily mean that the holder of a banknote has a private law claim against the central bank; cf. on the legal nature of banknotes Geva and others (n 41) 1122-1123, 1128 et seq.; Proctor (n 72) 715-716; H Weenink, 'The legal nature of Euro banknotes' (2003) 18 J.I.B.L.R. 433, 437.
Constitution provides Congress with a variety of powers in the ambit of finance and currency matters, especially to 'coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures' (U.S. Constitution Art.I, § 8, cl. 5 -'Coinage Clause').
Commission Recommendation of 22 March 2010 on the scope and effects of legal tender of euro banknotes and coins 122U.S.Department of Treasury, FAQs <https://www.bep.gov/currency/faqs>accessed 2 December 2022; see also Board of Governors of the Federal Reserve System (n 4) 25 note 35 ('This statute means that these forms of U.S. money are a valid and legal offer of payment for debts when tendered to a creditor.Even still, consumers and businesses may agree to use other methods of payment unless there is a state or local law that says otherwise').See, however, Guzelian (n 93) 58-59 ('First are legal tender laws.These laws require any creditor to accept payment in a fiat currency from the debtor, even if the original contract called for payment of equivalent value in some other form of currency or exchange').

130
Dietrich and Häring (n 87) para.55 et seq.See also Recital 19 Council Regulation (EC) No 974/98 of 3 May 1998 on the introduction of the euro [1998] OJ L 139/1 ('[…] whereas limitations on payments in notes and coins, established by Member States for public reasons, are not incompatible with the status of legal tender of euro banknotes and coins, provided that other lawful means for the settlement of monetary debts are available'); H Siekmann, 'Monetary Aspects of the Euro as Single European Currencya German Perspective' in R Freitag and S Omlor (eds), The Euro as legal tender (De Gruyter 2020) 1, 43 et seq. 131Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, [2006] OJ L 347/1; Art.135 contains an exemption for 'transactions, including negotiation, concerning currency, bank notes and coins used as legal tender, with the exception of collectors' items, that is to say, gold, silver or other metal coins or bank notes which are not normally used as legal tender or coins of numismatic interest'. 132Case C-264/14, Skatteverket v Hedqvist [2015] ECLI:EU:C:2015:718, [52]. 133Atwal v Nortonlifelock, Inc., 2022 U.S. Dist.LEXIS 19974 (United States District Court for the Western District of New York); LJ Trautman and AC Harrell, 'Bitcoin Versus Regulated Payment Systems: What Gives?' (2017) 38 Cardozo L. Rev. 1041, 1051 et seq. 134See, e.g.M Gronwald, 'Is Bitcoin a Commodity?On price jumps, demand shocks, and certainty of supply' (2019) 97 Journal of International Money and Finance 86. 135 These accounts are often referred to as 'master accounts', see Cheng and Torregrossa (n 80). 13612 U.S.C. § 342; see for an overview of further eligible entities, e.g.Crawford and others (n 42) 116; Hockett (n 41) at 404, 409-10. 137Board of Governors of the Federal Reserve System (n 4) 13.
160A Pinna and W Ruttenberg, 'Distributed ledger technologies in securities post-trading' (2016) ECB Occasional Paper Series No 172 <https://www.ecb.europa.eu/pub/pdf/scpops/ecbop172.en.pdf> accessed 2 December 2022 ('An UTXO may be seen as the digital representation of a banknote').161Thisshouldnotbeconfusedwith the psychological conceptions that humans might want to 'see and feel the currency', cf.Smits (n 72) 204.It is doubtful whether this line of argumentation also applies if the CBDC tokens can only be accessed by relying on the services of an intermediary, as the concept of banknotes implies that holders can exercise direct control.Thus, tokens that are necessarily 'deposited' with an intermediary (in this regard, like securities deposited with a bank or central securities depositories) would arguably not qualify as banknotes even if unintermediated control would be possibly from a technical standpoint.Cf. on different issuance and redemption options for 'e-banknotes' Geva and others (n 41) 1145 et seq.162Thecontractualobligation to pay in Paris is assumed here.163Cf.Athanassiou (n 5) 185.It should also be noted that storing a large amounts of cash in one's home involves costs and risks; in this light, a CBDC potentially offer a more secure way to 'store' (large amounts of) central bank money.164Board of Governors of the Federal Reserve System (n 4) 19 et seq.; ECB (n 4) 19 et seq., 36 et seq.; see also Auer and Böhme (n 29) 93 et seq.; M Bech and R Garratt, 'Central Bank Cryptocurrencies' (September 2017) BIS Quarterly Review 55, 63 et seq. 165Board of Governors of the Federal Reserve System (n 4) 14; ECB (n 8) 7; see also U.S. Department of the Treasury (n 25) 26.