Money & Finance › Currencies, the dollar & crypto › The digital dollar: stablecoins vs. a Fed-issued CBDC
Central bank digital currencies (CBDCs)
· Concept
Experts disagreeEconomists or investors genuinely disagree.
Digital money issued directly by a central bank: a direct claim on it, like paper cash, not on a commercial bank.
See it on the Money & Finance map →How it works
Money in a bank account is the bank's IOU; only cash is a direct claim on the central bank. A retail CBDC would give the public digital central-bank money. The Bahamas launched the first (the Sand Dollar, 2020), then Nigeria (eNaira, 2021) and Jamaica; China runs the biggest pilot, the e-CNY. The ECB is preparing a digital euro. The US went the other way: a January 2025 executive order barred federal agencies from creating one.
Why it matters
Supporters see cheaper, safer payments and monetary sovereignty; critics fear government surveillance and deposits fleeing banks.
Facts, rules and data
The Atlantic Council's CBDC tracker counts over 130 countries exploring them; BIS surveys and central-bank reports document pilots and launches.
Debates and risks
Whether people actually want them: Nigeria's eNaira drew very few users despite official pushes, and most pilots remain small.
Inside this (3)
Connections (10)
▸China's yuan (renminbi) has a digital version among Central bank digital currencies (CBDCs)Fact, law or data
The connection
China's e-CNY, or digital yuan, is the world's largest retail CBDC trial. Issued by the PBOC and handed out through state banks in phone wallets, it is used for shopping, transit and some salaries in pilot cities. It gives the central bank direct sight of payments and an alternative to Alipay and WeChat Pay, which dominate Chinese mobile payments.
When and why
Research began in 2014; pilots ran from 2020 in Shenzhen, Suzhou, Chengdu and Xiong'an, and it featured at the 2022 Beijing Winter Olympics.
How we know
The PBOC's 2021 e-CNY white paper and official data: about 7 trillion yuan, roughly $1 trillion, of cumulative transactions by mid-2024.
Debates and risks
Everyday use remains small next to Alipay and WeChat Pay; privacy concerns and its role in cross-border payments remain open questions.
▸Central bank digital currencies (CBDCs) compete with Stablecoins: crypto tokens pegged to a currencyExperts disagree
The connection
Both put money on digital rails. A CBDC is a claim on the central bank; a stablecoin is a claim on a private issuer holding reserves. The US barred work on a retail CBDC in January 2025 and backed private stablecoins through the GENIUS Act; Europe pursues a digital euro partly to avoid dependence on dollar stablecoins.
When and why
US executive order of January 23, 2025; GENIUS Act, July 2025; ECB officials' 2025 warnings that dollar stablecoins could weaken Europe's monetary control.
How solid is the link?
The executive order's text, and ECB speeches and blog posts presenting the digital euro as a counterweight to dollar stablecoins.
Debates and risks
Whether public CBDCs or private stablecoins win, or whether banks' own 'tokenized deposits' make both less necessary.
▸Central bank digital currencies (CBDCs) include a planned digital version of The euro and the European Central BankFact, law or data
The connection
The ECB is preparing a digital euro: a free, basic digital form of cash issued by the ECB, usable in shops and online across the euro area, even offline. Holdings would be capped, with around €3,000 per person discussed, so savers do not drain bank deposits. It cannot launch until EU lawmakers pass enabling legislation.
When and why
Investigation 2021–23; preparation from November 2023; in October 2025 the ECB moved to the next phase, eyeing a pilot in 2027 and possible issuance in 2029.
How we know
ECB progress reports and Governing Council decisions, and the European Commission's June 2023 legislative proposal.
Debates and risks
Whether Europeans will use it alongside cards and apps, and how the final law settles privacy and bank-deposit concerns.
▸FedNow: the Fed's instant payment service (2023) is often mistaken for Central bank digital currencies (CBDCs)Fact, law or data
The connection
FedNow moves existing bank deposits between banks; the public never holds money at the Fed, and no new money is created. A CBDC would be a digital claim on the Fed held directly by the public. Social-media rumors in 2023 said FedNow was a CBDC or would replace cash; the Fed publicly said it is not.
When and why
Rumors peaked around the July 2023 launch; a January 23, 2025 executive order then barred federal agencies from creating a US CBDC.
How we know
Fed statements and FAQs saying FedNow is not a CBDC, the service's design documents, and news fact-checks.
Debates and risks
Critics argue instant central-bank infrastructure could ease a future CBDC; supporters say the two are unrelated. Both sides cite the same design.
▸Executive order barring a US CBDC (Jan 23, 2025) bans US agencies from issuing Central bank digital currencies (CBDCs)Fact, law or data
The connection
It bars every federal agency from establishing, issuing or promoting a CBDC in the US or abroad, and orders any existing plans ended. That puts the US against the global trend: over 130 countries are exploring CBDCs, and China and the euro area are building them.
When and why
Signed January 23, 2025, by President Trump as Executive Order 14178.
How we know
The order's text in the Federal Register; the Atlantic Council's CBDC tracker shows the global contrast.
Debates and risks
Whether opting out costs the US influence over standards for cross-border digital payments.
▸Anti-CBDC Surveillance State Act (passed House; not law) would permanently ban US Central bank digital currencies (CBDCs)Fact, law or data
The connection
The bill would amend the Federal Reserve Act so the Fed could never issue a CBDC, or any 'substantially similar' digital asset, whether directly to the public or through banks acting as intermediaries. Unlike the July 2026 housing law, which bars a Fed CBDC only through 2030, it would have no end date.
When and why
House votes in May 2024 and July 2025; the temporary ban arrived in the July 2026 housing law.
How we know
House roll calls, the bill text, and reporting on the enacted housing law's CBDC section.
Debates and risks
Whether a permanent ban ever passes the Senate, where the stand-alone bill has stalled.
▸China's e-CNY digital yuan is the biggest test of Central bank digital currencies (CBDCs)Fact, law or data
The connection
With about 230 million personal wallets and 16.7 trillion yuan of cumulative payments by late 2025, the e-CNY is by far the largest retail CBDC. Its record shows the hard part: even with state backing, people stick with Alipay and WeChat Pay, so China now pays interest to spur use.
When and why
Across China since public pilots began in 2020, with interest added in January 2026.
How we know
PBOC data; former PBOC officials have publicly called its usage modest.
Debates and risks
Whether interest payments can lift usage where private payment apps already work well.
▸The digital euro (ECB project, earliest about 2029) is the leading Western project among Central bank digital currencies (CBDCs)Fact, law or data
The connection
Among rich economies it is the most advanced retail CBDC project. The US has banned one, Britain is still weighing a digital pound, and Canada shelved its retail plans in 2024. Its design, with offline payments and holding limits, is a template others study.
When and why
ECB work since 2021; next phase decided October 2025, with a pilot planned for 2027.
How we know
ECB, Bank of England and Bank of Canada public statements.
Debates and risks
Whether Europe proceeds if Parliament and member states fail to agree final terms.
▸Project mBridge: shared ledger for central-bank money links several countries' Central bank digital currencies (CBDCs)Fact, law or data
The connection
mBridge uses wholesale CBDCs: central-bank money for banks, not the public. Each member central bank issues its digital currency on the shared ledger, and banks in different countries swap them directly, payment against payment, in seconds.
When and why
Built since 2021 by the central banks of China, Hong Kong, Thailand, the UAE and, from 2024, Saudi Arabia.
How we know
BIS reports on the pilots and the 2024 minimum viable product.
Debates and risks
Whether wholesale CBDCs can scale, and who settles disputes among members with different legal systems.
▸The digital dollar: stablecoins vs. a Fed-issued CBDC would, if Fed-issued, be one of the Central bank digital currencies (CBDCs)Fact, law or data
The connection
A Fed-issued digital dollar would be a retail CBDC: a direct claim on the central bank held by the public, like the e-CNY or the planned digital euro. The US has ruled that out for now; the Boston Fed did research with MIT, Project Hamilton, from 2020 to 2022.
When and why
Fed studies 2020–2024; ruled out by the January 2025 order and, through 2030, the July 2026 law.
How we know
The Fed's January 2022 discussion paper on a CBDC and Project Hamilton's published reports.
Debates and risks
Whether the US reconsiders if other countries' CBDCs gain ground in cross-border payments.