Retail CBDCs are moving slowly just as stablecoins, instant-payment rails and tokenised bank money accelerate. But the apparent contest may be obscuring a deeper shift in what central banks actually need digital public money to do.
Five years ago, central bank digital currencies looked like an almost inevitable next step in the evolution of money. Today the picture is less linear. The Bank for International Settlements’ latest global survey still shows extraordinary official interest: 91% of 93 responding central banks were exploring a retail CBDC, a wholesale CBDC or both in 2024. Yet wholesale work is now more advanced than retail work, and more than one in three jurisdictions said stablecoins and other cryptoassets had accelerated their CBDC activity. The direction of travel is therefore not abandonment. It is fragmentation.
At the same time, competing forms of digital money and payment infrastructure are moving faster. The BIS estimated fiat-backed stablecoin market capitalisation at about $320 billion at the end of May 2026, while more than 90 fast-payment systems are already in operation around the world. The United States has chosen to promote regulated dollar stablecoins rather than a retail CBDC. Europe is pushing ahead with a digital euro, but a first potential issuance is targeted only for 2029. Britain has not yet decided whether to build a digital pound at all. BIS Annual Economic Report 2026; BIS Bulletin on cross-border payments.
The ‘CBDC race’ has split into several different races
The original CBDC debate often treated digital currency as a single product: a central-bank-issued alternative to cash that consumers would hold in a wallet. That framing now looks too narrow. Retail payments, wholesale settlement, programmable finance, cross-border transfers and monetary sovereignty are developing on different tracks, with different technologies and different competitors.
For households, a CBDC must compete with products that already work: bank cards, account-to-account payments, mobile wallets and instant payment systems. For businesses and financial institutions, the relevant question is increasingly whether central bank money can settle tokenised deposits and assets around the clock. For governments, the issue may be strategic: whether citizens should retain access to sovereign public money in a digital economy dominated by private payment firms or foreign-currency stablecoins.
Those are not the same race. A jurisdiction can decide that a retail CBDC is unnecessary while still investing heavily in tokenised central bank reserves. It can also build a public digital currency not because existing payments are slow, but because policymakers want a public option that preserves monetary sovereignty and resilience. This distinction explains why headline delays in retail CBDC projects can coexist with accelerating central-bank experimentation in wholesale digital money.
The first live retail CBDCs have exposed the adoption problem
The most uncomfortable evidence for retail-CBDC advocates comes from the jurisdictions that moved first. An IMF policy paper published in 2025 said retail CBDC adoption remained very limited, with less than 2% of the population using the eNaira in Nigeria and less than 1% using retail CBDCs in Jamaica and The Bahamas. The figures do not prove that retail CBDCs cannot scale; the three markets have specific payment structures, distribution constraints and financial-inclusion challenges. They do show that legal tender status and central-bank backing are not, by themselves, compelling consumer propositions.
Money is a network product. A payment instrument becomes useful when consumers can obtain it easily, merchants accept it, banks and wallets integrate it, and the experience is at least as convenient as existing alternatives. Central banks can issue the liability, but they cannot manufacture network effects by decree without broad participation from intermediaries and merchants. That creates a structural disadvantage against private payment systems that already sit inside users’ daily financial habits.
This is why the key question is not whether a CBDC is technologically functional. It is whether it solves a problem that consumers can feel. If a domestic instant-payment system already provides free or near-free transfers in seconds, a new form of money needs a sharper reason to exist: offline resilience, privacy, universal acceptance, programmability, financial inclusion, strategic autonomy or some combination of these.
Europe is making the strongest case that sovereignty is the product
The euro area is the clearest counterargument to the claim that retail CBDCs are fading. In July 2026, the European Parliament backed the opening of negotiations with the Council on the digital euro package by 416 votes to 169, with 22 abstentions. The policy case has increasingly been framed around resilience, privacy and reducing Europe’s dependence on non-European payment providers rather than simply making payments faster. European Parliament, 9 July 2026.
The project is also moving from design toward operational testing. The ECB selected 36 payment service providers in July from more than 50 applicants to join a 12-month pilot due to begin in the second half of 2027. The ECB says it aims to be ready for a potential first issuance during 2029, assuming the necessary legislation is adopted. The pilot will test online and offline person-to-person and merchant payments, while the eventual instrument is intended to complement, not replace, cash and private payment products. ECB digital euro project.
That timetable makes the digital euro slow by technology-industry standards. But speed is not the only policy objective. If the digital euro becomes legal tender with broad acceptance, its competitive advantage would be institutional rather than purely technological: a universally recognised public liability with common euro-area rules. The counterargument is equally important. If European banks and payment firms can deliver interoperable instant payments and tokenised deposits, the public may reasonably ask why another wallet or payment instrument is necessary. The digital euro must therefore earn relevance rather than assume it.
The CBDC landscape at a glance
| Jurisdiction / track | Status | What matters now | Competitive pressure |
| Euro area | Preparing pilot | 36 PSPs selected; 2027 pilot; potential 2029 issuance subject to legislation | Cards, wallets, instant payments |
| United Kingdom | Decision pending | Design phase ends in 2026; Bank/HMT decision on next steps due in 2026 | Next-gen retail infrastructure, stablecoins |
| United States | Retail CBDC not being pursued by executive branch | 2025 executive order bars agencies from establishing or promoting a CBDC; stablecoin framework enacted | Dollar stablecoins, existing bank/payment rails |
| India | Retail and wholesale pilots | Programmability, offline use and broader distribution are being tested | UPI and other mature digital-payment rails |
| Wholesale public money | Accelerating | Project Agorá moving from prototype toward real-value testing | Tokenised deposits and asset settlement |
The United States has deliberately chosen a different route
No major economy illustrates the divergence more sharply than the United States. A January 2025 White House executive order stated a policy of promoting lawful dollar-backed stablecoins and prohibited executive agencies, except where required by law, from taking action to establish, issue or promote a CBDC. The Federal Reserve still states that it has made no decision to issue a CBDC and would require an authorising law to proceed. White House executive order.
That policy choice was reinforced by legislation. The GENIUS Act became Public Law 119-27 on 18 July 2025, creating a federal framework for payment stablecoins. In effect, the United States has placed more weight on regulated private digital dollars than on a new retail liability of the central bank. This does not settle the global debate, but it matters because dollar stablecoins can circulate outside the United States and extend the reach of the dollar without requiring foreign users to hold a US bank account.
The strategic upside is private-sector speed and distribution. The downside is that the public digital-money layer becomes dependent on issuer regulation, reserve quality, redemption arrangements and private networks. The BIS notes that 99.4% of fiat-backed stablecoins by market value were pegged to the US dollar and that market capitalisation was around $320 billion at end-May 2026. That is still small beside bank deposits, but it is large enough to shape the policy debate. BIS Annual Economic Report 2026.
Britain is testing whether modern infrastructure makes a retail CBDC optional
The United Kingdom is taking a more agnostic position. The Bank of England and HM Treasury have not decided whether to introduce a digital pound. The current design phase ends in 2026, and the authorities have said their assessment could lead either to a build decision or to greater emphasis on other initiatives to modernise payments. Bank of England progress update, 4 March 2026.
That wording is significant. It treats the digital pound as one component of a broader “multi-money” system rather than the inevitable centre of retail payments. The same Bank of England update discusses tokenised bank deposits, systemic stablecoins, next-generation retail payment infrastructure and experimentation with wholesale central bank digital currency. The decision test is therefore increasingly functional: which combination of public infrastructure and private money delivers interoperability, resilience, innovation and trust at acceptable cost?
This is a useful model for other advanced economies. A CBDC should not be justified simply because another jurisdiction is building one. Nor should it be rejected simply because existing cards and accounts are convenient. The relevant comparison is against the payment system that will exist when the CBDC actually launches, not the system that existed when the project began.
India shows how a CBDC can become a feature layer rather than a payment replacement
India provides another important test because its CBDC pilot operates alongside one of the world’s most developed instant-payment ecosystems. The Reserve Bank of India has expanded both retail and wholesale pilots and has tested programmability, offline functionality and distribution of CBDC wallets by selected non-banks. Its 2024–25 Annual Report also describes targeted programmable uses, including government transfers and specific-purpose payments. Reserve Bank of India Annual Report.
The strategic lesson is that a CBDC does not need to beat an instant-payment rail at ordinary account-to-account transfers. It can instead supply capabilities that existing bank-account money does not provide as cleanly: cash-like central-bank settlement, programmable restrictions for a defined policy purpose, offline transfer or new forms of settlement finality. Whether those features create sustained mass adoption is still an open empirical question, but they give the product a clearer reason to exist.
Fast payments have raised the bar for every retail CBDC
The biggest competitive threat to retail CBDCs may not be crypto at all. It may be ordinary payment infrastructure getting better. A 2026 BIS Bulletin counted more than 90 fast-payment systems in operation and more than 20 under development. Many are opening access to non-bank payment providers, adopting ISO 20022 and APIs, and exploring cross-border links.
Once instant account-to-account payments are cheap, ubiquitous and embedded in banking apps, the consumer case for switching to a new monetary instrument narrows. A retail CBDC then needs to deliver something distinct: greater privacy, offline capability, universal reach, public-sector resilience, cross-border interoperability or stronger competition in markets dominated by a handful of private providers.
There is also a paradox. The more successful a country becomes at modernising bank-based payments, the harder it may be to justify a retail CBDC on efficiency grounds. Yet the more digital payments displace cash, the stronger the public-policy argument may become for preserving access to central bank money in a usable digital form. Efficiency and monetary sovereignty can therefore point in opposite directions.
Wholesale CBDC may be where the race is actually accelerating
If the retail debate is slowing, the wholesale debate is moving in the opposite direction. The BIS survey found wholesale CBDC work more advanced than retail work. In May 2026, Project Agorá reported that its prototype had demonstrated atomic, multi-currency settlement using tokenised central bank reserves and tokenised commercial bank deposits. The project, involving eight central banks and more than 40 private financial institutions, is advancing toward tests that include real-value transactions.
This is a fundamentally different proposition from giving every citizen a central-bank wallet. Wholesale tokenised central bank money can remain within the existing two-tier monetary system, while giving regulated institutions a settlement asset that can move on programmable infrastructure. It is less visible to the public but potentially more important to the plumbing of global finance.
The BIS Annual Economic Report 2026 makes this architecture explicit: tokenisation can be integrated into a system anchored in central bank money, with tokenised commercial bank deposits preserving the role of private credit creation. If that model becomes dominant, the winning “CBDC” may not look like the retail digital cash imagined at the start of the decade. It may look like tokenised reserves operating behind the scenes.
The risks have not disappeared; they have become more design-specific
Retail CBDCs still carry difficult trade-offs. A highly attractive, risk-free public wallet could pull funding away from commercial banks, especially in periods of stress. Holding limits and non-remuneration can reduce that risk, but they can also make the product less attractive. Privacy safeguards are essential for public legitimacy, yet anti-money-laundering rules and fraud controls require some degree of traceability and intermediary involvement. Offline payments can improve resilience and inclusion, but they complicate double-spend prevention and operational security.
There is also a cyber and concentration question. A national CBDC platform would become critical infrastructure. Outages, software failures or successful attacks could have system-wide effects. Distributed architecture does not remove governance responsibility: someone still has to define access, upgrades, recovery, dispute handling and liability. The central bank may not operate every customer-facing service, but it cannot outsource accountability for the integrity of its own money.
The opposing risk is strategic inaction. If domestic public money remains usable only as physical cash while commerce becomes fully digital and programmable, private payment firms and foreign-currency stablecoins could gain influence over how value moves. For the euro area, that concern is central to the digital euro case. For emerging markets, the BIS has warned that foreign stablecoins can increase the risk of digital dollarisation. The decision is therefore not between innovation and caution; both issuing and not issuing a CBDC create risks.
What the shift means for banks, fintechs, regulators and investors
For banks, the most important implication is that the future is likely to be multi-money rather than CBDC-only. Deposits, tokenised deposits, stablecoins and possibly retail CBDCs will need to interoperate without undermining liquidity management or customer experience. Banks that treat CBDC as a remote central-bank experiment may miss the more immediate transformation in wholesale settlement and tokenised deposits.
For fintechs and payment firms, the opportunity is increasingly at the interface. Central banks are unlikely to want to own every wallet, merchant relationship or application. The digital euro pilot’s reliance on payment service providers illustrates the likely model: public money underneath, private distribution and innovation above it. Firms that can provide identity, compliance, programmable-payment tools and interoperability may benefit regardless of which monetary instrument ultimately dominates.
For regulators, the challenge is to stop treating CBDCs, stablecoins, bank deposits and fast-payment systems as separate policy silos. They compete for the same transactional balances and can transmit liquidity stress between one another. Rules for redemption, access, holding limits, operational resilience and interoperability will determine not only safety but also market structure.
For investors, the key variables are less about predicting a single winning technology and more about understanding shifts in financial intermediation. A successful retail CBDC could affect deposit stickiness and payment economics. Stablecoin growth can alter demand for short-term government securities and bank funding. Wholesale tokenisation could reduce reconciliation costs and change the economics of custody, settlement and transaction banking. The winners may be institutions that can operate across all of these forms of money rather than those that bet on only one.
Conclusion: CBDCs are not losing one race because there is no longer one race
The retail CBDC narrative has clearly lost some of its early inevitability. First movers have struggled to generate widespread use. The United States has chosen stablecoins over a public retail digital dollar. Britain is explicitly considering whether other payment-modernisation initiatives could achieve the same objectives. Even Europe’s most advanced major-economy project is moving toward a 2027 pilot and a potential 2029 issuance rather than an immediate launch.
But it would be premature to conclude that central bank digital money has lost. Central banks are shifting toward a more pragmatic question: where does public money add something that private infrastructure cannot reliably provide? In retail markets, the answer may be resilience, privacy, inclusion or sovereignty. In wholesale markets, the answer may be the risk-free settlement asset that allows tokenised deposits and assets to move atomically across programmable platforms.
The decisive contest is therefore not CBDC versus stablecoin. It is a contest over the architecture of digital money. Private firms are moving faster at product distribution; central banks retain the unique ability to supply the settlement asset that anchors the monetary system. If CBDCs succeed, they may do so not by becoming the payment app everyone notices, but by becoming the public infrastructure nobody needs to think about.
References
3. European Central Bank — Digital euro project page (current project status, accessed 13 August 2026)
5. European Parliament — Digital euro: MEPs ready to start negotiations (9 July 2026)
6. Bank of England — Progress update: Digital Pound Design Phase (4 March 2026)
7. Federal Reserve Board — Central Bank Digital Currency (CBDC) project page (accessed 13 August 2026)
9. U.S. Congress / Government Publishing Office — GENIUS Act, Public Law 119-27 (18 July 2025)
13. Reserve Bank of India — Annual Report 2024–25: CBDC retail and wholesale pilot developments