CBDCs versus stablecoins explained
How central bank digital currencies differ from stablecoins and tokenized deposits, and where the US, euro area and China stand in October 2026.
Key takeaways
- A central bank digital currency (CBDC) is a digital liability of a central bank itself. A regulated stablecoin is a private company’s liability backed by reserves, and a tokenized deposit is a commercial bank’s liability on a blockchain.
- The United States has ruled out a CBDC by executive order since January 23, 2025, and is backing regulated private stablecoins instead. The euro area is moving the other way: digital euro legislation entered trilogue talks in 2026, with the ECB targeting possible first issuance in 2029.
- China’s e-CNY is the largest live retail CBDC and became interest-bearing on January 1, 2026. Wholesale work has split between BIS-led Project Agorá and the China-led mBridge platform.
- For banks, the central question is deposit flight: whether households move money out of bank accounts into CBDCs or stablecoins, and how holding limits and interest rules prevent it.
What a central bank digital currency is
A central bank digital currency is money issued directly by a central bank in digital form. Today, the only central bank money the public can hold is physical cash. Digital money people use every day is mostly commercial bank deposits, which are claims on private banks.
CBDCs come in two forms:
- Retail CBDC. Available to households and businesses for everyday payments, usually through bank or payment-app wallets. China’s e-CNY and the proposed digital euro are retail designs.
- Wholesale CBDC. Restricted to banks and financial institutions for settling large payments and securities trades, typically using tokenized central bank reserves. Project Agorá is a wholesale effort.
According to the Atlantic Council CBDC tracker (updated May 2026), 146 countries and currency unions representing over 98% of global GDP are exploring a CBDC, 41 pilots are under way, and only three countries have fully launched: the Bahamas, Jamaica and Nigeria.
Where major jurisdictions stand, October 2026
| Jurisdiction | Approach | Status |
|---|---|---|
| United States | No CBDC; regulated private stablecoins | Executive order of January 23, 2025 bars agencies from establishing, issuing or promoting a CBDC. GENIUS Act stablecoin regime takes effect by January 2027. |
| Euro area | Retail digital euro, online and offline | Council position December 2025; Parliament vote July 9, 2026; third trilogue session September 30, 2026. ECB eyes a pilot from mid-2027 and possible issuance in 2029. |
| China | Retail e-CNY, now deposit-like | Live since a 2019 pilot. Interest and deposit insurance on real-name wallets from January 1, 2026. |
| Multilateral (BIS) | Wholesale, tokenized reserves | Project Agorá reported results May 27, 2026 and plans real-value testing. |
United States. Section 5 of the January 2025 order, “Strengthening American Leadership in Digital Financial Technology,” prohibits agencies from any action to establish, issue or promote CBDCs and terminated ongoing plans. The House passed the Anti-CBDC Surveillance State Act (H.R. 1919) 219 to 210 on July 17, 2025, to put a ban in statute; a CBDC ban was dropped from the final fiscal 2026 defense bill in December 2025. The executive order, not a statute, is the operative constraint.
Euro area. The Eurosystem moved the digital euro into its next phase on October 30, 2025, saying it would only decide on issuance once legislation is adopted. The Council agreed its negotiating mandate on December 17, 2025. Parliament’s ECON committee backed the framework on June 23, 2026, and the plenary confirmed the mandate for negotiations on July 9, 2026 by 416 votes to 169. Trilogues (three-way talks among Parliament, Council and Commission) were held on September 10 and September 30, 2026, covering fees, legal tender status, holding limits and offline payments. Holding limits remain the main split between the two institutions.
China. By November 2025, the e-CNY had processed 3.48 billion transactions worth 16.7 trillion yuan since its pilot, according to the People’s Bank of China as reported by Caixin. From January 1, 2026, banks can pay interest on e-CNY wallet balances and real-name holdings carry deposit insurance, shifting it from a cash substitute toward a deposit-like instrument.
Wholesale projects. Project Agorá, coordinated by the BIS (Bank for International Settlements) with central banks including the Federal Reserve Bank of New York, Bank of England, Bank of Japan and Banque de France, plus more than 40 financial firms, reported on May 27, 2026 that tokenized reserves and deposits on a shared platform can settle cross-border payments atomically (both legs at once or not at all). The BIS handed mBridge, a multi-CBDC platform with China, Hong Kong, Thailand and the UAE, to its member central banks in October 2024. Reuters reported in January 2026 that mBridge had settled about $55.5 billion cumulatively, roughly 95% in digital yuan. Saudi Arabia’s central bank left the project, as reported in September 2026.
How CBDCs differ from stablecoins and tokenized deposits
All three can move on digital ledgers, but they are claims on different parties:
- CBDC: a direct claim on the central bank, with no credit risk. Design choices (privacy, holding limits, interest) are set by public authorities.
- Regulated stablecoin: a claim on a private issuer backed one to one by cash and short-term government debt. Under the US GENIUS Act, issuers cannot pay interest to holders. DefiLlama showed total stablecoin supply of about $308 billion on October 6, 2026.
- Tokenized deposit: an ordinary bank deposit represented as a token, so it stays inside the banking system with its capital rules and deposit insurance treatment. JPMorgan rolled out its JPMD deposit token on the Base blockchain for institutional clients in November 2025.
The US has, in effect, chosen private stablecoins and tokenized deposits to deliver digital dollars, while the euro area wants a public option alongside private ones, partly to reduce reliance on non-European card networks and dollar stablecoins.
Implications for banks and payments
A retail CBDC competes with bank deposits, the cheapest funding banks have. That is why European banks lobbied for strict holding limits and why the digital euro proposal does not pay interest. China took the opposite route, letting banks pay interest on e-CNY balances so the currency supports rather than drains their balance sheets.
Stablecoins raise a similar question in the US: if reserves sit in Treasury bills rather than bank deposits, lending capacity may shift. Wholesale CBDCs and tokenized deposits, by contrast, mostly strengthen banks’ role by modernizing settlement between them.
Risks and open questions
- Privacy and surveillance. The core US objection. The digital euro’s offline mode aims for cash-like privacy, but online payments will involve intermediaries and anti-money laundering checks.
- Deposit flight. In a crisis, households could move quickly from bank deposits into central bank money. Holding limits are the main safeguard, and their level is still being negotiated.
- Fragmentation. Competing wholesale platforms (Agorá, mBridge) and many stablecoin chains could split liquidity rather than unify it.
- Geopolitics and sanctions. A 2024 US congressional commission report warned mBridge could offer a route around US sanctions.
- Adoption. Launched retail CBDCs have seen modest use, and the digital euro still needs final legislation before the ECB commits.
Sources and further reading
- White House: Strengthening American Leadership in Digital Financial Technology (January 23, 2025)
- Atlantic Council CBDC tracker (updated May 2026)
- Law Society Gazette: ECB moves digital euro to next phase, 2029 target (October 2025)
- Agence Europe: third digital euro trilogue (September 30, 2026)
- BIS press release: Project Agorá results (May 27, 2026)
- Caixin: China to allow interest on digital yuan (December 2025)
Frequently asked questions
Is the United States building a CBDC?
No. A January 23, 2025 executive order bars federal agencies from establishing, issuing or promoting a CBDC, and the US is relying on regulated private stablecoins under the GENIUS Act instead.
When could the digital euro launch?
The ECB has said a pilot could start in mid-2027 and first issuance could come during 2029, but only if EU legislation is adopted. Parliament and Council were still in trilogue negotiations as of early October 2026.
What is the difference between a stablecoin and a tokenized deposit?
A stablecoin is issued by a private company holding segregated reserves, while a tokenized deposit is a regular bank deposit recorded on a blockchain. The deposit stays on the bank's balance sheet under banking rules.
What is a wholesale CBDC?
It is central bank money restricted to banks and financial institutions, used to settle large payments and securities trades. BIS-coordinated Project Agorá is testing tokenized reserves for cross-border payments.
This explainer is reviewed and updated as the rules and the market change. Last reviewed October 6, 2026. It is educational content and not financial, legal or tax advice.