Central Bank Digital Currencies (CBDCs) represent a new form of digital money, denominated in the national unit of account and serving as a direct liability of the central bank. Retail CBDCs are designed for everyday transactions by households and businesses, differing from existing cashless payment methods—such as credit transfers, card payments, and e-money—because they constitute a direct claim on the central bank, rather than on private financial institutions. In contrast, wholesale CBDCs are used for transactions between banks, central banks, and other financial institutions, functioning similarly to reserves or settlement balances held at central banks today.
A recent survey conducted by the Bank for International Settlements (BIS) in late 2023—the seventh consecutive annual survey—explores the current state and emerging trends in CBDC development among central banks worldwide. The findings offer insights into the progress of retail and wholesale CBDC projects and shed light on future issuance plans.
Growing Engagement in CBDC Projects
Since 2022, central bank involvement in CBDC research has remained consistently high. By the end of 2023, 94% of the 86 responding central banks were engaged in some form of CBDC work. Most are researching both retail and wholesale CBDCs, though about 30% are focused solely on retail applications, and 2% are dedicated exclusively to wholesale uses.
More than half (54%) of these institutions are conducting proof-of-concept testing, while about one-third (31%) have moved to the pilot stage. These figures reflect meaningful progress compared to previous years.
Work on CBDCs advanced more rapidly in advanced economies (AEs) than in emerging market and developing economies (EMDEs). Among AE central banks, 81% are now involved in proof-of-concept projects (up significantly from previous years), and 33% are running pilot programs. EMDE central banks have also increased activity, albeit more modestly.
Notable recent pilots include:
- The Swiss National Bank’s Project Helvetia Phase III
- Initiatives by the Monetary Authority of Singapore
- Experiments by the European Central Bank
- Projects led by the South African Reserve Bank
Four retail CBDCs have already been officially launched—all within EMDEs—in the Bahamas, the Eastern Caribbean, Jamaica, and Nigeria.
Motivations Behind CBDC Development
Central banks cite multiple reasons for exploring CBDCs. More than two-thirds of respondents highlighted the importance of preserving the role of central bank money in the digital economy. Retail CBDCs can help ensure the “singleness” of money—guaranteeing parity and convertibility between different forms of currency.
Other key motivations include:
- Improving domestic payment efficiency
- Enhancing payment security
- Promoting financial inclusion
While financial inclusion has traditionally been a higher priority in EMDEs, more central banks in AEs now also recognize it as a relevant driver. For wholesale CBDCs, the primary motivation is improving cross-border payments, with respondents pointing to potential gains in speed, cost, access, and transparency.
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Design Features Under Consideration
Central banks are converging around several likely features for retail CBDCs:
- Holding limits (supported by 68% of AEs and 63% of EMDEs)
- Interoperability with existing domestic payment systems (75% in AEs, 78% in EMDEs)
- Offline functionality (68% in AEs, 69% in EMDEs)
- Non-interest-bearing status (over half of all central banks)
About 50% of AE central banks and 35% of EMDE central banks are also considering allowing CBDC usage without a bank account.
Significant design differences exist between regions:
- EMDEs show greater interest in distributed ledger technology and programmable money
- AEs are more likely to allow non-resident access
- EMDEs are more inclined to impose transaction limits or capital flow measures
Interoperability and Wholesale CBDC Design
Interoperability is a central concern for wholesale CBDC development. Approximately two-thirds of central banks plan to ensure interoperability with domestic payment systems. Cross-border interoperability is also a priority, though less universally adopted.
Notably, EMDE central banks are more likely than AEs to pursue interoperability with other jurisdictions’ CBDCs or cross-border payment networks.
Design preferences vary:
- EMDEs often consider mandatory participation for payment service providers
- AEs show greater interest in programmability for specific use cases
- Both groups are still evaluating access rules for foreign payment providers
Use Cases for Retail and Wholesale CBDCs
Retail CBDC use cases most commonly include:
- Online payments (52%)
- Point-of-sale transactions (49%)
Ongoing pilots—such as India’s digital rupee project and the European Central Bank’s digital euro investigation—are testing these applications.
For wholesale CBDCs, top use cases include:
- Interbank payment settlements (46%)
- Delivery-vs-payment (DvP) arrangements (50%)
- Foreign exchange transactions (24%)
- Payment-vs-payment (PvP) setups (17%)
Projects like the BIS Innovation Hub’s Mariana experiment and the SNB’s Helvetia Phase III are demonstrating the technical feasibility of these applications.
Stakeholder Engagement and Collaboration
Central banks are increasingly engaging with external stakeholders to inform CBDC design. For retail CBDCs, collaboration with governments, technology providers, and commercial banks is common in both AEs and EMDEs.
Examples include:
- The Bank of Japan’s CBDC Forum with private sector participants
- The National Bank of Georgia’s partnership with a technology firm for its digital GEL project
- The Central Bank of Brazil’s inclusion of private and public entities in its Drex pilot
Wholesale CBDC development involves even broader collaboration, including with other central banks and academic institutions. The Hong Kong Monetary Authority, for instance, is forming a expert community involving banks, tech firms, and researchers.
Yet end-user involvement remains limited—only 28% of central banks include users in retail CBDC design, and 18% in wholesale projects. Lessons from early implementations (like Nigeria’s eNaira) highlight the importance of stakeholder engagement and public education.
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Frequently Asked Questions
What is a retail CBDC?
A retail CBDC is a digital form of central bank money accessible to the general public for everyday transactions. It represents a direct claim on the central bank, unlike commercial bank deposits or electronic money issued by private entities.
How do wholesale CBDCs differ from retail CBDCs?
Wholesale CBDCs are designed for use by financial institutions for interbank settlements and other large-value transactions. They are not accessible to the general public and function similarly to existing reserve accounts at central banks.
Which countries have launched CBDCs?
As of 2023, four jurisdictions have fully launched retail CBDCs: the Bahamas (Sand Dollar), the Eastern Caribbean (DCash), Jamaica (Jam-Dex), and Nigeria (eNaira). Many other countries are in advanced pilot or testing phases.
Are CBDCs interest-bearing?
Most central banks currently planning CBDCs do not intend to pay interest on holdings. However, some—like the Bank of Israel—are considering the possibility of interest-bearing features under certain conditions.
How do CBDCs impact financial inclusion?
CBDCs have the potential to improve financial inclusion by providing access to digital payments for unbanked populations. This is particularly relevant in emerging economies where traditional banking penetration remains low.
Can CBDCs be used offline?
Many central banks consider offline functionality a important feature, especially in regions with unreliable internet connectivity. Technical solutions for offline CBDC payments are currently under development in several jurisdictions.
Conclusion
CBDC development continues to advance globally, with most central banks now actively researching, testing, or piloting digital currency projects. Wholesale CBDC experimentation has grown significantly, particularly in advanced economies, though retail projects also continue to progress.
Design preferences reflect regional priorities and concerns, with interoperability, security, and offline functionality emerging as common themes. While no single approach fits all jurisdictions, international cooperation and knowledge-sharing will be essential for creating safe, efficient, and inclusive digital payment systems for the future.