Skip to content

GLOSSARY · BLOCKCHAIN & WEB3

CBDC (Central Bank Digital Currency)

What a CBDC is, how it differs from a stablecoin and from a bank deposit, and where the ECB digital euro stands.

WHAT IS IT? · FOR DUMMIES

A CBDC is like cash, but digital and issued by a countrys central bank. If the digital euro ever launches, holding digital euros will be like having banknotes on your phone: money from the European Central Bank, not from a private bank or a company. It differs from cryptocurrencies in that it is not decentralised: the central bank controls it.

WHAT IS IT? · PRO

A CBDC (Central Bank Digital Currency) is a central-bank liability in digital form, accessible to households and firms (retail CBDC) or only to financial institutions (wholesale CBDC). Unlike a stablecoin — issued by a private entity against reserves — and unlike bank money — a commercial bank liability — a CBDC is central bank money: the same issuer as banknotes, with no private-issuer risk.

In the euro area, the ECBs digital euro is in its preparation phase: regulation in progress, provider testing and holding-limit design, with no issuance decision taken. Other central banks are further along in pilots (Chinas e-CNY is the largest) and several are exploring the wholesale route to settle interbank operations and tokenized securities in central bank money.

For tokenized asset markets, wholesale CBDC is the piece that would enable definitive delivery-versus-payment settlement in central bank money; until it arrives, that role is covered by MiCA-regulated e-money tokens (EMTs), as we explain in our guide to the euro stablecoin.

01 / Key points

  • Digital money issued by the central bank: the same issuer as banknotes
  • Can be retail (for the public) or wholesale (financial institutions only)
  • Not a cryptocurrency or a stablecoin: no private issuer, no decentralisation
  • The ECB digital euro is in preparation phase, with no issuance decision

02 / Advantages

  • No private-issuer risk: a direct central-bank liability
  • Settlement finality in central bank money, ideal for tokenized markets
  • Public digital payments without depending on private networks

03 / Disadvantages

  • Privacy: the design decides how much the issuer sees of each payment
  • Bank disintermediation risk if it replaces deposits, hence holding limits
  • Uncertain timeline: most projects remain in study or pilot phase

This entry is informative. It is not legal, tax or investment advice. The rules cited change: check the current version on BOE and EUR-Lex.