CBDC (Central Bank Digital Currency)

A central bank digital currency (CBDC) is a digital form of sovereign money — a liability of the central bank — made available to end users directly (retail CBDC) or restricted to financial institutions for interbank and wholesale settlement (wholesale CBDC). CBDCs are distinct from stablecoins (liabilities of private issuers) and tokenized deposits (liabilities of commercial banks): only a CBDC represents a direct claim on the central bank, carrying zero credit risk by definition.

Retail vs Wholesale CBDC

Retail CBDC would be available to the general public — businesses and individuals — as a digital equivalent of physical cash. Design choices include account-based vs token-based architectures, privacy models (fully traceable vs privacy-preserving), interest-bearing vs non-interest-bearing, programmability (smart contract restrictions on spending), and interoperability with existing payment systems. The introduction of retail CBDC raises concerns about bank disintermediation: if consumers can hold CBDC directly with the central bank, commercial bank deposit bases could shrink, affecting credit creation.

Wholesale CBDC restricts access to licensed financial institutions for interbank settlement. It closely mirrors existing central bank reserve accounts but uses DLT infrastructure, enabling programmable settlement — particularly atomic delivery-versus-payment (DvP) settlement of tokenized securities against central bank money. Most central banks with advanced tokenization programmes have prioritised wholesale CBDC as the more tractable near-term objective, deferring the politically complex retail CBDC design to a later stage.

Global Status as of Early 2026

China — e-CNY (Digital Yuan): China has the most advanced large-economy CBDC programme. The e-CNY has been deployed in extensive retail trials since 2020, reportedly reaching approximately $250 billion in cumulative transaction value across dozens of pilot cities by 2024. e-CNY is distributed through commercial banks and payment platforms, with no direct central bank consumer accounts. Programmability features — including expiry dates on government distributions — have been tested. e-CNY is not intended as a cross-border payment instrument in its current form.

European Union — Digital Euro: The European Central Bank (ECB) launched a formal investigation phase in October 2021 and moved to a preparation phase in November 2023, designing the digital euro’s technical architecture and exploring privacy-preserving models. The ECB has emphasised that the digital euro would be a complement to cash, not a replacement, and would include holding limits to prevent bank disintermediation. Legislative proposals for the digital euro framework were under European Parliament and Council review as of early 2026. No launch date had been publicly announced.

United States — FedNow vs Digital Dollar: The Federal Reserve launched FedNow in July 2023 — an instant payment rail, not a CBDC — enabling 24/7 bank-to-bank transfers. The US position on a retail digital dollar has been politically contested: executive orders in 2022 directed agencies to study CBDC, but Congress passed legislation in 2024 prohibiting the Federal Reserve from introducing a retail CBDC without explicit Congressional authorisation. A wholesale CBDC programme remains under exploration by the Federal Reserve Bank of New York (Project Cedar) and other reserve bank research arms.

Bahamas, Jamaica, Nigeria: Have launched live retail CBDCs (Sand Dollar, JAM-DEX, eNaira) with modest but growing adoption.

BIS Project mBridge: A multi-CBDC platform developed jointly by the BIS Innovation Hub, the Hong Kong Monetary Authority, the Bank of Thailand, the Digital Currency Institute of the People’s Bank of China, and the UAE Central Bank. mBridge enables near-instant cross-border settlement between participant central banks using a common platform — without correspondent banking intermediaries. The project reached a minimum viable product stage in 2024 and is transitioning from BIS stewardship to participating central banks’ governance.

Impact on Tokenized Asset Ecosystem

The development of wholesale CBDCs has direct implications for tokenized securities markets:

• Settlement asset: Tokenized securities transactions need a trusted settlement leg. Wholesale CBDC would provide a risk-free settlement asset on the same DLT platform, enabling true atomic DvP without reliance on commercial bank money or stablecoins.
• Current intermediary: In the interim, most tokenized securities settlements use stablecoins, tokenized commercial bank deposits, or traditional central bank reserves via overnight batch settlement as the cash leg.
• Project examples: The Swiss National Bank’s Project Helvetia (on-chain SNB settlement using a wholesale CBDC on SDX), the Eurosystem’s DL3S project (triggering euro wholesale CBDC settlement from DLT platforms), and HKMA’s projects have demonstrated on-chain DvP with wholesale CBDC.
• Programmability: Smart contract-enabled CBDC could automate repo, margin, and collateral management across institutional market participants — a significant efficiency gain over current batch settlement processes.

Related entries: Tokenized Deposit, Stablecoin, Atomic Settlement (DvP), DLT Act (Swiss)

Primary sources: BIS CBDC Research and Project mBridge | ECB Digital Euro