AFAIK the ECB wants to have both things. Digital Euro being a CBDC could open up a lot of possibilities, but they want an unified payment system, too, and that would be a nice first job for digital Euro.
I must be missing something because I still don't understand what differentiates a "Digital Euro" from "Euro stored in digital form". They're essentially the same. The reason why crypto currencies are different is the mechanisms by which they are exchanged (i.e., blockchain) or how they are issued (i.e., mining). The ECB already has control over how the Euro is exchanged and issued. The only thing a digital euro does is eliminate the cash aspect but these days that's a small amount, and they could also achieve by gradually retiring cash and shrinking the available amount (like Sweden has done).
The difference is more a financial or legal thing, than a technical one.
From an users' perspective paying with digital Euro would work more-or-less the same as you pay today with card, bank transfer or something based on QR codes. But it will have very different guarantees and trusts behind the scene.
Today you don't really think about keeping your money in a bank and paying with card as a different thing than having physical cash, because banks and payment services have very strict regulations and insurance schemes. Banks rarely goes bankrupt and even if they do, most of the people are not affected, because they get back their money from deposit insurance.
Banks can create money from thin air (without the approval of the central bank) and lend it to you (and destroy when you pay your loan back), they can not do that with Digital Euro.
Everybody would be able to convert all their Digital Euro to banknotes at the same time, but that would bankrupt any commercial bank.
Banks can deny your request to open an account or provide payment services to you (e.g. what happened with the ICC judge), you can own Digital Euro without having a bank account.
Banks pay interest for using your money (and the risk you take), this could even be negative that means some people even willing to loose money if they can have Euro instead of their original currency. Banks wouldn't be able to use your Digital Euro, you wouldn't get any interest on it.
Digital Euro (the same way as physical cash), is a legal tender, money in bank and card payments are not.
The value of Digital Euro doesn't depend on your bank, the numbers on your bank account could worth nothing if your bank goes bankrupt, central banks can not go bankrupt.
Digital Euro (for a limited amount) could be exchanged directly between two peers like physical cash (offline, without connection to internet or any bank).
Some people argue that it is just for more government surveillance and control, but the government already could access your bank and card transactions and freeze or confiscate your money.
