A central bank digital currency (CBDC) is digital money issued as a direct liability of a central bank, available in retail form for the general public or wholesale form restricted to financial institutions. According to the Atlantic Council CBDC Tracker, 137 countries and currency unions representing 98% of global GDP are exploring one, yet only three have fully launched: the Bahamas, Jamaica, and Nigeria.
The acronym expands to Central Bank Digital Currency. US commentators often call a hypothetical version a “digital dollar.” A CBDC differs from assets in the wider cryptocurrency adoption landscape because a sovereign central bank backs it, and it differs from a bank deposit because the liability sits with the central bank rather than a commercial bank. That distinction drives everything else: monetary policy, financial stability, and how readers think about digital money.
Key Takeaways
- 137 countries and currency unions, representing 98% of global GDP, are exploring a CBDC, according to the Atlantic Council’s CBDC Tracker.
- 3 countries have fully launched a retail CBDC: the Bahamas (Sand Dollar, October 2020), Nigeria (eNaira, October 2021), and Jamaica (JAM-DEX, launched 11 July 2022 with over 120,000 accounts opened in weeks).
- 91% of the 93 central banks surveyed by the Bank for International Settlements in 2024 were exploring a retail CBDC, a wholesale CBDC, or both, according to BIS Papers No 159.
- China’s e-CNY processed roughly $2.3 trillion in transactions and reached 225 million personal wallets by November 2025, according to People’s Bank of China data.
- The United States banned work on a retail CBDC on 23 January 2025, according to Presidential Actions published by the White House, in an executive order signed by President Trump that remains the only such prohibition globally.
- The European Central Bank aims to be ready for a first issuance of the digital euro during 2029, according to ECB communications, pending EU legislation in 2026.
How Does a CBDC Work?
A CBDC moves through three layers: issuance by the central bank, distribution to end users or institutions, and settlement on a ledger. The US Treasury defines a CBDC as “a form of digital money or monetary value, denominated in the national unit of account, that is a direct liability of the central bank,” which shapes how each layer behaves.
A useful metaphor: a CBDC is a digital banknote issued directly from the central bank’s vault, delivered through a smartphone app or institutional wallet instead of an ATM. The sovereign guarantee travels with the coin, unlike a bank deposit, where the liability sits with a commercial lender.
1. The Central Bank Issues the Liability
The issuing authority creates the digital unit on its own balance sheet. Unlike a stablecoin or commercial bank deposit, a CBDC unit is a claim on the central bank itself. That sovereign backing is the defining feature and the reason central banks, not private issuers, lead every live deployment.
2. Distribution Happens Through Intermediaries or Direct Wallets
Most retail CBDC designs use a two-tier model: the central bank issues, while licensed banks, payment firms, or wallet providers onboard customers and handle compliance. The Bahamas released the Sand Dollar through authorised financial institutions beginning 20 October 2020, setting the template. Wholesale CBDCs restrict distribution to a defined group of banks and institutions.
3. The Ledger Settles Payments and Finalizes Transfers
Every CBDC runs on a ledger. Some use a traditional central database, while others use distributed ledger technology (DLT). Wholesale pilots such as Project mBridge rely on DLT to move tokenised central bank money across jurisdictions in real time. Retail designs usually pick conventional databases for speed and throughput, layering offline payment modes above.
| Design Choice | Typical Retail CBDC | Typical Wholesale CBDC |
| Access | General public via wallets | Banks and select financial institutions |
| Technology | Central database or permissioned DLT | DLT for tokenised settlement |
| Remuneration | Usually zero interest to avoid bank runs | May earn interest tied to policy rate |
Source: Bank for International Settlements (CPMI d174); Atlantic Council CBDC Tracker
Retail vs Wholesale CBDC: What’s the Difference?
The Bank for International Settlements draws the cleanest line: “The wholesale variant would limit access to a predefined group of users, while the general purpose one would be widely accessible.” Retail CBDCs target everyday consumers, while wholesale CBDCs target interbank settlement.
Retail CBDCs act like digital cash in a consumer wallet. The Sand Dollar gives Bahamian residents a digital version of the Bahamian dollar, and Nigeria’s eNaira is pegged one-to-one with the physical naira through a tiered consumer and merchant wallet structure. Holdings caps, offline payment modes, and merchant acceptance networks dominate retail design debates.
Wholesale CBDCs sit on a different track. The BIS 2024 survey flipped the prevailing assumption: of the 93 central banks surveyed, 91% (85) were exploring either a retail CBDC, a wholesale CBDC, or both, and at an aggregate level, the exploration of wholesale CBDCs is at more advanced stages than the exploration of retail CBDCs, reversing the 2020-2022 retail-first narrative. Wholesale projects focus on settling large-value transfers, securities, and cross-border payments on DLT rails rather than giving consumers a central bank account.
The pivot matters because it reshapes who benefits. Retail CBDCs were pitched for financial inclusion. Wholesale CBDCs are being built for asset tokenisation, faster cross-border settlement, and preserving central bank money in an institutional market that is increasingly moving onto tokenised rails.
Why Does a CBDC Matter?
Central banks cite a specific motive for issuing digital money: keeping public money relevant. “Preserving the role of central bank money amid the decline of cash and the rise of tokenisation of traditional assets is a key driver for many central banks.” Cash use is falling across advanced economies, and tokenised deposits and stablecoins are growing quickly.
More than one in three of the 93 jurisdictions surveyed by the BIS had accelerated CBDC work in light of developments in stablecoins and other cryptoassets. That acceleration reads as a defensive posture. If private digital money dominates settlement, central banks lose direct monetary transmission into the economy.
Emerging markets see it differently. The International Monetary Fund identifies financial inclusion and reduced dollarization or cryptoization as key benefits of CBDC adoption. Jamaica, Nigeria, and the Bahamas each frame their retail CBDC as a way to bank the unbanked. The pattern repeats across the rollouts we have tracked in 100-plus payments-adoption articles: inclusion pitched upfront, regulatory convenience implied underneath, and consumer take-up that lags the launch announcements by a wide margin.
Pros, Cons, and Risks of CBDCs
Advantages
- Central bank-backed safety: A CBDC is a sovereign liability, not a commercial bank deposit, so it carries no credit risk from a private issuer.
- Faster settlement: Wholesale CBDCs on DLT can settle interbank and cross-border payments in seconds rather than days.
- Financial inclusion: Retail CBDCs can extend central bank money to residents without bank accounts, a core IMF framing.
- Programmability: Rules can be embedded into the token itself (for example, time-limited consumption stimulus in China).
- Resilience of public money: CBDCs preserve a public-money option as physical cash declines.
Trade-offs and Risks
- Bank disintermediation: The IMF warns that “bank disintermediation and digital run risks could warrant the decision to put caps on holdings of CBDC”.
- Privacy concerns: Every CBDC transaction touches a central-bank-linked ledger. The US executive order cites privacy and sovereignty directly.
- Low retail adoption to date: Nigeria’s eNaira represented less than 1% of Nigeria’s money supply at the end of 2024 despite official campaigns.
- Cyber and operational risk: A national CBDC ledger is critical infrastructure and a high-value target for attacks.
- Political backlash: The US executive order signed in January 2025 prohibits federal agencies from undertaking any action to establish, issue, or promote CBDCs within the jurisdiction of the United States or abroad, citing financial stability, privacy, and sovereignty concerns.
Countries With Live CBDCs and Major Pilots
Three countries run fully live retail CBDCs, and 49 CBDC pilot projects are underway globally, according to the Atlantic Council. For a country-by-country breakdown of who actually uses digital money today, see our crypto adoption rates by country dataset. The table below shows the current status by jurisdiction.
| Country | CBDC Name | Status | Launch or Target | Issuing Central Bank |
| The Bahamas | Sand Dollar | Live (retail) | 20 October 2020 | Central Bank of The Bahamas |
| Nigeria | eNaira | Live (retail) | 25 October 2021 | Central Bank of Nigeria |
| Jamaica | JAM-DEX | Live (retail, legal tender) | 11 July 2022 | Bank of Jamaica |
| China | e-CNY (digital yuan) | Advanced pilot | 2020 pilots, 225M wallets by Sept 2025 | People’s Bank of China |
| India | e-rupee | Advanced pilot | Executive Order 23 January 2025 | Reserve Bank of India |
| Euro area | Digital euro | Preparation phase | Target first issuance 2029 | European Central Bank |
| Brazil | Drex | Limited deployment | January 2026 focus on tokenised assets | Banco Central do Brasil |
| United Kingdom | Digital pound | Research phase | Design phase through 2026 | Bank of England |
| United States | (none) | Banned for retail | Executive order 23 January 2025 | Federal Reserve (blocked) |
Source: Atlantic Council CBDC Tracker; Central Bank of The Bahamas; Bank of Jamaica; People’s Bank of China; European Central Bank; The White House
The Atlantic Council has also tracked a doubling of cross-border wholesale CBDC projects since Russia’s invasion of Ukraine and the G7 sanctions response, with 13 such projects currently active. Project mBridge is the most advanced: the platform connects the central banks of China, Hong Kong, Thailand, the UAE, and Saudi Arabia, reached the minimum viable product stage in June 2024, and has drawn nearly 30 additional central banks as observers. The Bank for International Settlements transferred full management of mBridge to the participating central banks on 31 October 2024. Nearly 30 observing central banks had joined by that date, ending the BIS’s direct role.
Real-World Applications of CBDCs
Cross-Border Wholesale Settlement
Project mBridge is the clearest example of wholesale CBDC in production. Nearly 30 additional central banks had joined mBridge as observing members by the time the BIS exited in October 2024. The platform settles cross-border transfers in seconds using tokenised central bank money, sidestepping the correspondent-banking network. For institutions facing sanctions risk or long settlement windows, wholesale CBDC rails slot into the same decentralized finance market that already handles card, wire, and mobile-wallet volume.
Domestic Financial Inclusion
Retail CBDCs in the Caribbean and Nigeria were pitched as inclusion tools. By the end of July 2022, over 120,000 people and 2,300 Jamaican merchants had opened CBDC accounts, within weeks of the JAM-DEX launch. Adoption momentum has since plateaued in all three launched markets, showing that issuing a CBDC is easier than convincing users to switch away from cash and existing mobile-money products.
Programmable Payments and Policy Levers
China’s e-CNY runs a large real-world experiment in programmable central bank money. The People’s Bank of China announced an upgraded framework that takes effect on 1 January 2026, requiring commercial banks to pay interest on real-name digital yuan wallet balances in accordance with deposit rate regulations, alongside more than 3.4 billion transactions worth roughly 16.7 trillion renminbi, about 2.3 trillion US dollars, in processed e-CNY volume, moving the e-CNY beyond a pure cash substitute. By the end of November 2025, e-CNY had processed more than 3.4 billion transactions worth roughly 16.7 trillion renminbi, about $2.3 trillion, a more than 800% increase from 2023.
Scenario: A Digital Euro Purchase in 2029
Picture a shopper in Berlin paying for groceries with a digital euro at the back end of the decade. Her wallet app, linked to her commercial bank, shows a digital euro balance alongside her regular account. At checkout, she taps her phone. The payment moves directly from her central-bank-backed digital euro balance to the merchant’s digital euro wallet, online or offline. The transaction clears instantly, with no card network or correspondent bank in the middle. The ECB aims to be ready for a potential first issuance of the digital euro during 2029, assuming the necessary EU legislation is adopted in the course of 2026, so the scenario above depends on both technical readiness and legislative outcomes.
Frequently Asked Questions (FAQs)
A CBDC is not the same as cryptocurrency. A CBDC is a direct liability of a central bank and carries sovereign backing, while cryptocurrencies such as Bitcoin and Ether are decentralised, issued by network protocols, and not tied to any government. Some CBDCs run on distributed ledger technology similar to crypto. The legal and monetary nature is different.
Three countries have fully launched a retail CBDC: the Bahamas (Sand Dollar, October 2020), Nigeria (eNaira, October 2021), and Jamaica (JAM-DEX, July 2022, with over 120,000 accounts opened within weeks). Several others run advanced pilots, including China (e-CNY), India (e-rupee), and Brazil (Drex). The European Central Bank aims to be ready for a potential first issuance of the digital euro during 2029.
Retail CBDC is available to the general public as digital cash, used for everyday payments through consumer wallets. Wholesale CBDC is restricted to banks and select financial institutions. It is usually built on distributed ledger technology to settle large-value interbank and cross-border transfers. The BIS has reported that at an aggregate level, the exploration of wholesale CBDCs is at more advanced stages than the exploration of retail CBDCs.
The United States will not have a retail digital dollar under current federal policy. The executive order signed by President Trump prohibits federal agencies from undertaking any action to establish, issue, or promote CBDCs within the jurisdiction of the United States or abroad, making the US the only country to formally ban retail CBDC work. The order promotes dollar-backed stablecoins as an alternative.
Conclusion
A CBDC is digital central bank money issued as a direct liability of the sovereign issuer, with retail and wholesale variants that behave very differently in practice. 137 countries are exploring one, 49 run pilots, and three have fully launched, but the centre of gravity has shifted from retail financial-inclusion pilots to wholesale institutional settlement systems. The next three years will be decided by two questions: whether the digital euro actually reaches issuance in 2029, and whether wholesale platforms like mBridge scale from pilot to production for cross-border settlement. Both answers will reshape how sovereign digital money fits alongside stablecoins and tokenised deposits.
