The popularity of digital assets, including stablecoins, has attracted the attention of banks and governments worldwide. However, governments do not want to lose control over financial systems by offering citizens access to cryptocurrencies. Instead, they are developing their own version of digital money — CBDC.
What is CBDC?
CBDC (Central Bank Digital Currency) is a digital currency issued by a central bank. It functions as a new form of money that can be used alongside traditional fiat currencies*. The primary goal of CBDC is to improve payment systems, increase financial transparency, and reduce costs for international transfers.
Additionally, CBDC provides access to banking services for those who may not be able to use traditional banking systems. For example, in many developing countries and remote areas, people face difficulties accessing financial services due to the lack of bank branches. CBDC offers a solution to this problem by allowing users to manage digital currencies on mobile devices without physically visiting a bank.
* Fiat currencies are the official currencies issued by governments, and they have legal tender status for transactions within a country. They are not backed by any commodity, such as gold, and their value is based solely on trust in the government issuing them. Examples of fiat currencies include the US dollar, the euro, the pound, and other currencies in circulation globally.
Differences between CBDC and cryptocurrencies
CBDCs are digital counterparts to fiat currencies issued by governmental institutions, while cryptocurrencies are decentralized and have no central issuer. The main differences are as follows:
Control and Regulation: CBDCs are managed by governmental bodies, whereas cryptocurrencies lack a unified regulator.
Database: CBDCs rely on centralized databases, unlike public blockchains, allowing governments to control the currency's circulation.
Anonymity: CBDCs are developed with user identification in mind, whereas cryptocurrencies can provide some level of anonymity.
Stability: CBDCs are always pegged to fiat currencies at a 1:1 ratio, unlike cryptocurrencies, which can be highly volatile*.
Use in the Economy: CBDCs are tools of government policy used to stimulate the economy and control the money supply, whereas cryptocurrencies develop independently of governments.
* Volatility refers to the degree of price fluctuation of an asset over a period of time. High volatility means prices can change rapidly and significantly, making such assets riskier for investors.
CBDC's issues with anonymity
With CBDC, central banks will be able to track all transactions and intervene if necessary, such as by blocking specific amounts.
This has both advantages and disadvantages. On one hand, this approach allows for the quick blocking of transactions related to fraud, terrorism financing, or sanctions violations.
On the other hand, users' funds may be mistakenly blocked or blocked due to excessive regulation. Furthermore, full government control raises concerns about privacy and the risks of total financial surveillance. Critics fear that CBDCs could become a tool for exerting pressure on citizens and businesses, limiting their freedom to manage their own funds.
CBDC and fiat currencies
CBDCs and fiat currencies are forms of money issued by a single entity — the central bank of a country — that has complete control over their issuance and circulation.
Like regular money, CBDCs will be mandatory for use in domestic transactions. Stores, businesses, and government entities will not be able to refuse to accept it. This makes CBDC an official payment instrument, on par with cash and non-cash payments.
CBDC status in different countries
As of September 2025, according to the Atlantic Council, 3 countries (Jamaica, Nigeria, and the Bahamas) have officially launched CBDCs in their financial systems. About 140 countries, representing more than 95% of global GDP, are at least exploring the possibility of implementing CBDCs, and approximately 50 of them are already testing this tool.
North and Latin America
The US has rejected the creation of a digital dollar, despite supporting stablecoins. Canada ended its CBDC research in 2024.
Europe
The European Central Bank is testing CBDCs, but the decision to launch the digital euro depends on technological readiness. Russia postponed the launch of the digital ruble to 2026. The UK and Sweden are also conducting research and experiments on digital currencies.
Asia and the Middle East
China and India are already testing their CBDCs, such as the digital yuan and digital rupee. Kazakhstan and South Korea have also conducted successful tests of their digital currencies.
Africa
Nigeria became one of the first countries to launch a CBDC — eNaira officially. South Africa has also started developing CBDCs.