The global financial landscape is undergoing a revolutionary transformation as central banks worldwide accelerate their exploration and deployment of Central Bank Digital Currencies (CBDCs). According to recent surveys, 94% of central banks are engaged in some form of work on CBDCs, with 11 countries having fully launched a digital currency and pilots underway in more than three dozen others. This comprehensive analysis examines the latest developments, progress, and challenges across major CBDC initiatives globally.
Global CBDC Landscape: Current State and Progress
The momentum behind CBDCs has reached unprecedented levels in 2025. Over 120 different jurisdictions, including major economies like the ECB, UK, and the US, are evaluating national digital currencies. The current breakdown shows nine countries and the Eastern Caribbean Currency Union have launched CBDCs, 38 countries plus Hong Kong are running pilot programs, and 67 countries along with two currency unions are actively researching CBDCs.
The driving forces behind this surge include technological efficiency, financial inclusion goals, and the desire to maintain monetary sovereignty in an increasingly digital world. CBDCs offer real-time settlement capabilities, reduced risk for merchants, and lower complexity compared to traditional payment systems.
China’s Digital Yuan: Leading the Global Charge
Massive Scale and Adoption
China remains the undisputed leader in CBDC implementation with its digital yuan (e-CNY). The digital yuan is still the largest CBDC pilot in the world, with total transaction volume reaching 7 trillion e-CNY ($986 billion) in June 2024 across 17 provincial regions. This represents a nearly four-fold increase from the 1.8 trillion yuan recorded in June 2023.
By the end of June 2025, cumulative transaction volumes reached RMB 7 trillion (US$988 billion), with approximately 180 million individual digital RMB wallets opened—nearly one in every eight Chinese citizens.
International Expansion Strategy
China is aggressively pursuing global expansion of the e-CNY. The People’s Bank of China announced the establishment of an international operations center in Shanghai for the digital yuan, envisioning a “multipolar” currency system where multiple currencies support the global economy.
The digital RMB cross-border settlement system is fully connected to ten ASEAN nations and six Middle Eastern countries, meaning about 38% of global trade could bypass the US dollar-dominated SWIFT network. This strategic positioning challenges the traditional financial infrastructure and offers an alternative to Western-dominated payment systems.
Cross-Border Integration
The e-CNY’s international reach extends through several key initiatives:
- Project mBridge: A cross-border wholesale digital currency initiative connecting China, Thailand, UAE, Hong Kong, and Saudi Arabia
- ASEAN Integration: ASEAN’s RMB-denominated trade surged to 5.8 trillion yuan in 2024, with Malaysia, Singapore, and others adding the currency to their foreign reserves
- Belt and Road Integration: The digital yuan is integrated into infrastructure projects like the China-Laos Railway and Jakarta-Bandung High-Speed Rail
European Union’s Digital Euro: Systematic Preparation
Current Development Phase
The European Central Bank (ECB) is making substantial progress on the digital euro project. The preparation phase began in November 2023 and will last until October 2025, focusing on finalizing the digital euro scheme rulebook and selecting providers for platform development.
The ECB has published its third progress report on the preparation phase, confirming that key milestones and deliverables remain on track. The project involves extensive collaboration with market participants, consumer representatives, and policymakers to ensure the digital euro meets user needs and regulatory requirements.
Technical Development
Key technical achievements include:
- Rulebook Development: Work has progressed on the calibration of the digital euro holding limit and deployment of offline digital euro solutions on secure elements of mobile devices
- Innovation Partnerships: Innovation partnerships with stakeholders will test conditional payments and explore innovative use cases, with outcome reports expected in July 2025
- Privacy Standards: The ECB emphasizes privacy by design, ensuring the digital euro would offer the highest privacy standards, with the ECB unable to identify users or purchases from payment data
Timeline and Political Support
ECB President Christine Lagarde confirmed the bank’s target to finalize preparations by October 2025, though the actual launch may not occur until 2028. After the Euro Summit meeting on March 20, 2025, European leaders stated that “accelerating progress on a digital euro is key to support a competitive and resilient European payment system”.
India’s E-Rupee: Rapid Growth in Asia
India’s e-rupee is now the second-largest CBDC pilot globally, with digital rupee circulation rising to ₹10.16 billion ($122 million) by March 2025, up 334% from ₹2.34 billion in 2024. The Reserve Bank of India is expanding both retail and wholesale CBDCs with new use cases, offline functionality, and broader participation.
United Kingdom’s Digital Pound Initiative
The Bank of England continues its methodical approach to CBDC development. The bank published its first digital pound progress update in January 2025, announcing plans to launch the Digital Pound Lab this year. The earliest the UK would issue a digital pound would be in the second half of this decade, with the bank currently in a design phase testing real-world applications.
United States: Notable Resistance
The United States presents a contrasting approach to CBDCs. In 2025, President Trump issued an executive order to halt all work on a retail CBDC, making the US the only country to do so. However, the US continues to engage in wholesale cross-border payments research through Project Agorá, collaborating with six other major central banks.
Some US states have introduced legislation to ban state payments using CBDCs, with Florida being the first state to pass such a law citing privacy concerns.
Cross-Border and Wholesale CBDC Projects
The geopolitical landscape has significantly influenced wholesale CBDC development. Since Russia’s invasion of Ukraine and G7 sanctions response, cross-border wholesale CBDC projects have more than doubled, with currently 13 projects including Project mBridge.
These initiatives aim to reduce dependency on traditional payment rails and provide alternatives to SWIFT-based transactions, particularly appealing to countries seeking financial autonomy from Western-dominated systems.
Key Challenges and Risks
Banking System Concerns
One of the primary concerns surrounding CBDC implementation is potential banking disintermediation. Citizens could pull too much money out of banks by purchasing CBDCs, potentially triggering bank runs and affecting banks’ ability to lend. This risk is particularly pronounced in countries with unstable financial systems.
Operational and Security Risks
CBDCs carry operational risks as they are vulnerable to cyber attacks and require robust resilience measures. The centralized nature of most CBDC systems creates potential single points of failure that must be carefully managed.
Regulatory Framework Requirements
CBDCs require complex regulatory frameworks including privacy, consumer protection, and anti-money laundering standards that need strengthening before adoption. The current patchwork of global regulations creates confusion and higher costs for consumers.
Privacy and Control Considerations
Privacy remains a contentious issue in CBDC development. While proponents emphasize enhanced privacy features compared to traditional electronic payments, critics raise concerns about government surveillance capabilities. CBDCs have faced criticism for potential use as “tools for coercion and control”.
Different countries are taking varied approaches to privacy:
- China: Implements “controlled anonymity” with different privacy levels based on transaction values
- Europe: Emphasizes privacy by design with strong user protection standards
- United States: Privacy concerns have contributed to political resistance against retail CBDCs
Market Impact and Economic Implications
Monetary Policy Transmission
CBDCs could affect monetary policy transmission by offering safe stores of value and efficient payment means, potentially increasing competition for deposit funding and affecting bank profits. For moderate CBDC holdings, effects are expected to be relatively small in normal times but could be more significant during financial stress.
Financial Inclusion Benefits
Financial inclusion is often a key policy objective for retail CBDCs, especially in emerging and lower-income countries. CBDCs can provide access to digital payments for unbanked populations and reduce the costs associated with cash management.
Future Outlook and Global Competition
The CBDC landscape is rapidly evolving with significant geopolitical implications. China’s early lead with the e-CNY has created competitive pressure on other major economies to accelerate their own programs. The ECB is advancing a “global euro moment” through the digital euro pilot, aiming to strengthen the euro’s international role, while China promotes the digital yuan as part of its strategy for a multipolar currency system.
As CBDCs move from experimental phases to potential widespread deployment, their success will depend on addressing technical challenges, regulatory frameworks, user adoption, and international coordination. The next few years will be critical in determining how CBDCs reshape the global financial system and whether they fulfill their promise of more efficient, inclusive, and sovereign digital payment systems.
The race to deploy CBDCs reflects broader geopolitical competition for monetary influence, with early movers potentially gaining significant advantages in setting global standards and reducing dependency on existing financial infrastructure. As this transformation unfolds, the balance between innovation, security, privacy, and financial stability will remain at the forefront of central bank considerations worldwide.
