Industry Outlook

Central Bank Digital Currency market accounted for USD 0.4 Billion in 2024 and is expected to reach USD 3.0 Billion by 2035, growing at a CAGR of around 19.2% between 2025 and 2035. Central Bank Digital Currency is a form of Digital Currency issued by the countries/region’s central bank, the value of which is equivalent to the fiat currency of the region determined by the central bank. This Digital Currency could be used by the general public, private & public institutions, and governments for domestic and cross-border transactions. The issuance of this currency is generally aimed at policy goals, safety, efficiency, and reliability.

Report Scope:

Market Dynamics

CBDCs offer a government-backed alternative to private cryptocurrencies

Central Bank Digital Currencies (CBDCs) provide a government-backed alternative to private cryptocurrencies, thus enhancing the control of central banks over monetary systems and financial stability. Unlike cryptocurrencies, which operate in a decentralized format and possess high volatility, CBDCs are regulated and issued by the Central banks, ensuring a stable value equivalent to the fiat currency. This stability helps prevent financial risk and market disruptions with unregulated digital assets.
For example, the digital yuan, China's central bank digital currency, stands out as one of the leading initiatives in CBDC experimentation and development, having undergone extensive testing across various cities throughout the country. Actions like these have demonstrated that CBDCs can be integrated well into the legacy financial system.

The introduction of CBDCs could disrupt traditional banking systems, potentially affecting bank profitability and stability.

The Introduction of CBDC could potentially impact the commercial banking sector. Shifting of deposits from traditional commercial banks to CBDCs is one of the major concerns. If the general public and private entities chose to keep their funds with CDBCs for being safe, secure, and central bank-backed option, then the private banks could face liquidity challenges. Deposits being the primary source of bank funds, this shift could hamper their ability to lend thereby affecting their main revenue stream. Another challenge on the commercial banking front is if they kept their interest rates high to retain users, this could result in a significant dent in their profit margin and reduce the overall profitability of the institution.

CBDCs have the potential to improve cross-border payment systems by reducing costs, increasing speed, and improving transparency

Many Central Banks are now exploring the possibility of issuing a Digital currency for international transactions. These cross-border CBDCs aim to tackle some of the key inefficiencies in cross-border payments, operational challenges, speed issues, and high costs. One recent example of this development is Project mBridge. Started in 2021 with the collaboration among Central Bank of the United Arab Emirates, Digital Currency Institute of the People's Bank of China, the BIS Innovation Hub, the Bank of Thailand and Hong Kong Monetary Authority. Recently, the Central bank of Saudi Arabia joined the collaboration, tallying the total members to the count of 31.

Industry Experts Opinion

CBDC is going to be the future currency of the world and it is necessary that every central bank, every country works on CBDC. The learning has been excellent and more than what it was one year ago. We are even more convinced that CBDC can prove to be the most effective and efficient mode for cross-border payments in particular, other than of course domestic transactions. And this is not very difficult."

• Shaktikanta Das, RBI Governor, India

“With the collaboration between BDF’s DL3S and the HKMA’s Ensemble Sandbox underway, we look forward to joining hands with the BDF to further explore different cross-border payment solutions and use cases, to promote financial market connectivity and push forward the development of the global tokenization market”

• Howard Lee, deputy chief executive of the HKMA

“Collaborations between the public and private sectors in the exploration of Central Bank Digital Currencies can help central banks better understand the range of technology possibilities and capabilities available with respect to CBDCs.”

• Sheila Warren, Head of Blockchain, Digital Assets and Data Policy, World Economic Forum

“The shift toward digital currencies requires a stable instrument that is both digitally native and easily connected to fiat currency like the U.S. dollar”

• Dan Schulman, president and CEO, PayPal

Segment Analysis

Based on the Type: CBDCs can be divided into two segments, Wholesale CBDC and Retail CBDC. Retail Central Bank Digital Currencies (CBDCs) are digital forms of money issued by a central bank that are intended to be used by the general public in similar fashion to the fiat currency. On the other hand, wholesale CBDCs are used by large institutions for large-scale, interbank transactions and settlement processes.

Based on Transaction Type: Domestic CBDCs are digital versions of a country’s currency used for everyday transactions within that country. They make paying for goods and services easier and more efficient. Cross-border CBDCs are designed to simplify and speed up international transactions between countries. They help lower costs and make transferring money across borders smoother. Essentially, while domestic CBDCs improve local payment systems, cross-border CBDCs tackle the challenges of moving money around the globe.

Regional Analysis

The global landscape of Central Bank Digital Currencies (CBDCs) is transforming quickly and various parts of the world are embracing it in different ways. China leads the way in Asia with its digital yuan (e-CNY), moving other countries along. Europe is working closely on the concept of a CBDC, with several countries trialing a potential digital euro under Project “Stella,” a collaboration between the European Central Bank and the Bank of Japan. In the Americas, the Bahamas is the only country to have fully launched a CBDC, as the U.S. and Canada continue to study the opportunity, which includes Project “Jasper-Ubin,” a joint project by the Bank of Canada and the Monetary Authority of Singapore. In Africa, the eNaira is gaining momentum as a meaningful CBDC development and both Latin America and the Middle East have joined in on CBDC experimentation as well, including “Aber,” a collaborative project between the Saudi Arabian Monetary Authority and the Central Bank of the United Arab Emirates related to how CBDCs may improve financial inclusion and stability. In Asia, the Hong Kong Monetary Authority and Bank of Thailand collaborative project “Inthanon-LionRock” is similarly presenting a CBDC opportunity. Each part of the world is developing its own story based on regional economic and /or regulatory nuances making for a global yet highly local adaptation of CBDCs.

Projects Landscape

In the evolving landscape of Central Bank Digital Currencies (CBDCs), several notable projects are shaping the future of digital currency. Project Jura explores cross-border transactions between Switzerland and France, while Project Icebreaker aims to test the interoperability of different CBDCs and their impact on international payments. Digital Euro and D-Cash focus on creating robust digital versions of the Euro and Caribbean currencies, respectively. Project Agorá and Project Mariana are researching the technological and economic impacts of CBDCs in Brazil and Latin America. Project Cedar x /Ubin+ examines CBDC integration between Singapore and Hong Kong. Venus Initiative and Project Helvetia are working on cross-border and domestic CBDC solutions, respectively. Project Polaris and Project Rosalind investigate the implications of digital currencies in the U.S. and the UK. Project Dunbar and Project Aurum focus on optimizing cross-border payment systems, while Project mBridge explores multi-currency CBDCs for the Gulf region. Digital Yuan (e-CNY), Digital Dollar, Digital Pound (Britcoin), and Digital Rupee represent national efforts to modernize their respective currencies. Collectively, these projects aim to enhance efficiency, security, and global integration in the financial system.

Central Bank Digital Currency Market, Company Shares Analysis, 2024

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Recent Developments:

• In August 2024, HDFC Bank introduced a number of exciting new features for Unified Payments Interface (UPI) and Central Bank Digital Currency (CBDC). These features include UPI Circle-Delegate Payment, personalized UPI experiences, and User-Level Programmable CBDC. Along with superior convenience, security and accessibility, these features are meant to improve the overall digital banking experience.
• In July 2024, China launched its first real trade service multi-Central Bank Digital Currency in South China’s Guangdong Province, this currency supports real-time transaction and trading which significantly improves operationality while reducing costs and improving the transparency of cross-border transactions.
• In June 2024, Hong Kong, France announced a cross-border CBDC interoperability trial which includes three central bank settlement solutions.

Report Coverage:

By Type

• Wholesale CBDC
• Retail CBDC

By Transaction Type

• Domestic
• Cross Borders

By Currency Model

• Single Currency CBDC
• Multi-Currency CBDC

By Technology

• Blockchain
• Non Blockchain
• Hybrid Tech

By Launch Status

• Pilot Stage
• Fully Launched
• R&D Stage

By End User

• Consumer
• B2B
• Government

By Region

North America

• United States
• Canada
• Mexico

Europe

• Germany
• France
• United Kingdom
• Italy
• Spain
• Netherlands
• Switzerland
• Ukraine
• Poland
• Rest of Europe

Asia Pacific

• China
• Japan
• India
• Australia
• South Korea
• Vietnam
• Thailand
• Indonesia
• Philippines
• Singapore
• Rest of Asia Pacific

Latin America

• Brazil
• Mexico
• Argentina
• Colombia
• Venezuela
• Rest of Latin America

MEA

• Saudi Arabia
• United Arab Emirates
• Kuwait
• Bahrain
• Oman
• Qatar
• Turkey
• South Africa
• Nigeria
• Rest of Middle-East and Africa

List of Projects:

• Project Jura
• Project Icebreaker
• Digital Euro
• D-Cash
• Project Agorá
• Project Mariana
• Project Cedar x /Ubin+
• Venus Initiative
• Project Helvetia
• Project Polaris
• Project Rosalind
• Project Dunbar
• Project Aurum
• Project mBridge
• Project Mandal
• Digital Yuan (e-CNY)
• Digital Euro
• Digital Dollar
• Digital Pound (Britcoin)
• Digital Rupee

Frequently Asked Questions (FAQs)