Re: But why is this necessary?
"Why does it need to be centralised?"
Muddled thinking, that's why. "the need for a central ledger to store user balances" is EXACTLY what happens now, except that each bank keeps it's own central ledger, there isn't one central ledger held by the central bank. The idea of cryptocurrency isn't that of digital *money* (which as you say has existed for decades now), but of digital *cash*. For some people the benefit of cash is that it changes hands immediately and is immediately available.... but the new banking technologies already provide this - immediate person to person (account to account) transfer with zero delay. (To be fair, AFAIK these systems are national-only, I'm not sure if international and/or cross-currency ones exist - having said that cash is by definition single-currency). The second benefit of cash is anonymity, which is prized by criminals, money-launderers and tax evaders, but also by people who value privacy and don't want governments poking around in their business *. Which brings me to....
"...great care will be required to ensure the public understands that the currency affords the same privacy as cash."
There is simply no way that any government-issued cryptocurrency could offer the same privacy as cash. The key is in this phrase... "Centrally governed, distributed database technologies might achieve the ledger requirements". In this sense, they are using "distributed database" as a technical term, meaning data is physically stored and processed in diverse locations, but it is still "Centrally governed" ie there is a central authority, the bank, that can see all transactions AND knows the identities of the transacting parties. Allowing people to open accounts anonymously or pseudonymously would completely go against banking regulations like "know your client" - it's never going to happen.
Final nail in the coffin of this terrible idea - the value that people see in Bitcoin is that it is not possible to arbitrarily create more and inflate away the value. A central bank digital currency would almost certainly allow the central bank to issue as many as they want whenever they want, just as they do currently.
* And depending on the level of trust you have in a government, this can be a primary and very legitimate consideration. Would you trust the banks and/or government to have full oversight of all your earnings and spendings if you were living in the Arabian Gulf, Iran, Afghanistan etc etc???