What is a CBDC?
Last reviewed 2026-07-27
A CBDC — central bank digital currency — is a digital form of a country's fiat money issued and backed directly by its central bank. Unlike a stablecoin, which is a private issuer's token pegged to fiat, a CBDC is itself sovereign money: a direct liability of the central bank, like physical cash.
How it works
CBDCs come in two flavors. A retail CBDC is held and spent by the public, usually through wallets provided by commercial banks or payment firms while the central bank runs the core ledger. A wholesale CBDC is restricted to banks and financial institutions for interbank settlement. Most designs use permissioned databases or distributed ledgers controlled by the central bank — not public, permissionless blockchains — so transactions can be regulated, reversed or restricted in ways crypto cannot.
Deployment status as of mid-2026: the Bahamas launched the world's first nationwide CBDC, the Sand Dollar, in October 2020; Nigeria's eNaira followed in October 2021 and Jamaica's JAM-DEX in July 2022. China's e-CNY (digital yuan) remains the largest pilot, and from January 2026 verified e-CNY balances can earn interest via commercial banks — a push to lift persistently weak adoption. The European Central Bank closed the digital euro's preparation phase in October 2025 and moved to the next stage: it assumes the digital euro regulation is adopted during 2026, is selecting payment providers for a pilot with first transactions targeted from mid-2027, and aims to be ready for a possible first issuance in 2029.
The United States has gone the opposite way: a January 23, 2025 executive order prohibits federal agencies from establishing, issuing or promoting a CBDC, and the Anti-CBDC Surveillance State Act — passed by the House in July 2025 — awaits Senate consideration. US policy instead favors regulated private stablecoins.
Why it matters
CBDCs are the state's answer to crypto and private stablecoins: they promise cheaper payments and financial inclusion, but raise surveillance and programmability concerns since the issuer can observe or restrict transactions. Real-world adoption has been weak so far — a 2023 IMF working paper found that in any given week roughly 98.5% of eNaira wallets went unused — making CBDCs one of the clearest cases where government backing has not translated into usage.
Real-world examples
Sand Dollar (Bahamas, live since October 2020), eNaira (Nigeria, live since October 2021), JAM-DEX (Jamaica, live since 2022), e-CNY (China, large-scale pilot, interest-bearing from January 2026), digital euro (ECB, pilot phase targeted from mid-2027).
Related terms
Go deeper
Read our full 2026 guide to central bank digital currencies, or browse the complete crypto glossary.
CBDC 2026 Guide Browse Glossary