CBDC: why states need their own version of digital money

The high popularity of digital assets, including stablecoins, has forced banks and governments of different countries to pay attention to the crypto industry.

However, state structures are unlikely to miss the opportunity to retain control over financial flows while giving citizens access to cryptocurrencies. Instead, they came up with a new type of digital currency called CBDC.

What is CBDC?

CBDC stands for Central Bank Digital Currency. CBDC represents a type of digital payment instrument issued by the central bank. In other words, CBDC is simply a new form of money. As a rule, CBDC serves as the official legal tender of a country alongside its national fiat currency.

CBDC can simplify and speed up cross-border payments (like stablecoins), reduce costs for companies and consumers, and, in addition, provide access to banking services for people who cannot otherwise access them. Moreover, CBDC offers numerous opportunities for payment automation and the integration of artificial intelligence into the fintech sector.

Despite some similarities with digital assets, CBDC has nothing in common with crypto assets.

Differences between CBDC and cryptocurrencies

CBDC is a digital analogue of cash already issued by a central bank. Unlike cryptocurrencies, which have no single issuer and exist in a decentralized network, CBDCs always rely on state institutions and operate within the legal framework of a particular country.
CBDC accounting and settlements are carried out via a managed database. This allows central banks to directly control the circulation of CBDC, which is impossible with cryptocurrencies. Unlike public blockchains, where transaction data is distributed among thousands of nodes and not subject to centralized intervention, CBDC ensures complete regulatory control over money flows.
CBDC is not anonymous. While cryptocurrencies allow users to retain some level of privacy, central bank digital currency is designed from the outset with identification and tracking of all operations in mind.
Cryptocurrencies are highly volatile and not tied to national currencies. CBDCs, by contrast, are always issued in a fixed 1:1 ratio with fiat money.
CBDC is a tool of state policy. They can be used to stimulate the economy, control the money supply, and introduce new financial technologies. Cryptocurrencies, on the other hand, develop independently of states and are not subject to their economic strategies.

Important note on CBDC anonymity: Central banks will be able to track all movements of digital currency and instantly intervene in transactions, for example, by blocking specific amounts. Centralized stablecoins such as Tether (USDT) and USD Coin (USDC) have similar features.

This has both advantages and disadvantages. On the one hand, it enables the quick blocking of transactions related to fraud, terrorism financing, or sanctions evasion. On the other hand, users' funds may be blocked by mistake or due to excessive regulation.

Moreover, full government control raises concerns about privacy and the risks of total financial surveillance. Critics fear CBDC could become a tool of pressure on citizens and businesses, limiting the freedom to manage their own funds.

Due to the lack of practical implementation, it is still difficult to assess the full scale of CBDC's potential benefits and problems. However, balancing security, privacy, and user freedom will be the key challenge in introducing central bank digital currencies.

How CBDC resembles national currencies

CBDC and fiat money are both forms of currency. Like national currencies, CBDCs have a single issuer, typically the central bank of a country. Issuers have complete control over the issuance and circulation of CBDC.

Additionally, CBDC and national currencies serve the same monetary functions:

Act as a means of payment;
Serve as a unit of account;
Functions as a store of value.

The CBDC exchange rate is pegged to the national currency at a 1:1 ratio.

Also, like regular money, CBDC will be mandatory for acceptance in domestic transactions: shops, businesses, and government agencies will not be able to refuse them. This means CBDC will effectively become an official payment instrument alongside cash and non-cash money.

Significantly, CBDC can be developed for individual countries or for an entire coalition of states, as in the case of the euro. For example, BRICS countries are planning to create an instrument called the BRICS Bridge to simplify digital payments and implement their own CBDC. However, it is not yet known whether the BRICS Bridge will involve a unified digital currency or use the CBDC of each participating country.

The status of CBDC in different countries

According to the Atlantic Council, as of September 2025, three countries have officially launched and integrated their own CBDC into their financial systems: Jamaica, Nigeria, and the Bahamas.

Approximately 140 countries, which account for more than 95% of global GDP, are exploring the possibility of implementing CBDCs, and around 50 of them are already testing the tool through pilot projects.

North and Latin America

USA. The U.S. abandoned the creation of a digital dollar. Moreover, Donald Trump banned the creation and use of CBDC in the U.S. Instead, the current president is promoting stablecoins, including USD1 from the World Liberty Financial project, directly linked to Trump's family.
Canada. In September 2024, the Bank of Canada announced the end of its CBDC research.

Europe

European Union. In May 2025, the European Central Bank launched a digital platform for CBDC testing. Still, it noted that the final decision on launching the digital euro would depend on both regulatory and technological readiness.
Russia. The mass rollout of the digital ruble was initially planned for July 2025, but the head of the central bank postponed it indefinitely, despite successes in pilot testing.
United Kingdom. In January 2025, the Bank of England announced the creation of a "digital pound laboratory" to experiment with CBDC.
Sweden. The Ministry of Finance began investigating the introduction of a digital krona, stating that there was no apparent need for it yet. However, in March 2024, the Riksbank published a report on the successful testing of the e-krona.
Germany, France, and Italy. These countries declared they would adopt the digital euro once it is successfully implemented.

Asia and the Middle East

China. In regions like Shanghai, the digital yuan is already being used for payments within pilot projects. In 2025, the head of the People's Bank of China announced plans to create an international operating center for e-CNY in Shanghai and to cooperate with SWIFT.
India. In September 2024, the government launched the Subhadra Yojana program to test digital rupees, with 17 banks already participating as of 2025.
Kazakhstan. By 2025, the National Payment Corporation and the National Bank of Kazakhstan had conducted several successful tests of the digital tenge. AI integration and budget payment automation in digital tenge are planned for 2026–2027.
South Korea. In July 2025, the Bank of Korea announced a temporary suspension of the second phase of its Hangang pilot project for testing digital won.
Saudi Arabia. In June 2024, it became a full participant in mBridge (Multiple CBDC Bridge), a multi-platform CBDC project launched by the Swiss-based Bank for International Settlements (BIS).
UAE. The United Arab Emirates also joined the mBridge project, alongside China, Hong Kong, and Thailand.

Africa

South Africa. The private sector, together with the Intergovernmental Fintech Working Group (IFWG) and the South African Reserve Bank (SARB), launched the Kokha pilot project back in 2018 to develop CBDC infrastructure.
Nigeria. In 2021, the country launched the eNaira to expand access to unbanked services, becoming one of the first countries in the world to launch a CBDC officially.
Egypt. The Central Bank of Egypt has been studying CBDC applications since 2018, but the current status of the research is still unknown.