Central Bank Digital Currency Explained: Retail, Wholesale, Risks

A central bank digital currency (CBDC) is money in digital form that is a direct claim on a country's central bank, the way a banknote is. A retail CBDC is for the public to spend. A wholesale CBDC is only for banks settling with each other. Most central banks are studying one. In the United States, a January 2025 executive order bars federal agencies from working to establish, issue or promote any CBDC.

That one-paragraph answer hides a lot of design choices. Who sees your payments, whether it works without a signal, and what happens when the system is attacked all depend on how a given CBDC is built. This post covers the plain-language basics, where the main projects stand, and the privacy, security and resilience questions. Each status below is what the source said when read on 27 October 2026. This is not investment, legal or policy advice.

What is a central bank digital currency?

The money most people use every day is not central bank money. The balance in your bank account is a promise from your bank. Only cash is a direct claim on the central bank.

A CBDC would give people (or banks) a digital claim on the central bank itself. The US executive order on digital finance uses a definition that matches most others: Executive Order 14178 calls a CBDC "a form of digital money or monetary value, denominated in the national unit of account," that is "a direct liability of the central bank."

Interest in the idea is wide. In the 2024 BIS survey on CBDCs and crypto, published 22 August 2025, "Of the 93 central banks surveyed, 91% (85) were exploring either a retail CBDC, a wholesale CBDC or both." Exploring is not issuing: most of that work is research, pilots or prototypes.

What is the difference between a retail and a wholesale CBDC?

The two types share a name and very little else.

	Retail CBDC	Wholesale CBDC
Who holds it	Individuals and businesses	Banks and other financial institutions
What it replaces or adds to	A digital version of cash	Central bank reserves, on new technology
Typical use	Shop and person-to-person payments	Interbank settlement, cross-border transfers, settling tokenised securities
Main public debate	Privacy, bank deposits moving out of banks, financial inclusion	Speed, cost and risk of settlement between institutions
Examples in this post	Digital euro (in preparation), e-CNY (pilot), e₹ retail (pilot)	e₹ wholesale (pilot), Project mBridge

The BIS survey adds that "the exploration of wholesale CBDCs is at more advanced stages than exploration of retail CBDCs." The survey states that as a finding and does not give a reason for it.

How is a CBDC different from a stablecoin or a bank deposit?

The difference is who owes you the money.

CBDC: the central bank owes you.
Bank deposit: your commercial bank owes you, usually backed by a deposit guarantee up to a limit.
Stablecoin: a private issuer owes you, backed by reserves it holds. US rules for those issuers are in our explainer on the GENIUS Act.

Banks are also experimenting with putting ordinary deposits and assets on shared ledgers. That is a separate topic, and our guide to tokenised assets and deposits covers it.

Where do the main CBDC projects stand?

Statuses change quickly. This table records only what each primary source said on 27 October 2026.

Project	Type	Status at the source (read 27 October 2026)
Digital euro (ECB)	Retail	Preparing. Could be issued during 2029 if EU lawmakers adopt the regulation in 2026. No issuance decision taken.
e-CNY (People's Bank of China)	Retail	In pilot. The latest figures read are from August 2022.
e₹ (Reserve Bank of India)	Retail and wholesale	Retail pilot live since December 2022. Wholesale pilot with 16 participants (RBI FAQ, updated 1 October 2026).
Project mBridge	Wholesale, multi-country	Concluded as a BIS project. Handed over to the partner central banks in October 2024.
United States	—	Federal agencies prohibited from promoting or issuing a CBDC by Executive Order 14178 (January 2025).

When will the digital euro launch?

The ECB says it could be issued during 2029, but only if EU lawmakers adopt the regulation in 2026, and no decision to issue it has been taken yet.

The European Central Bank's progress page sets out the timeline. The investigation phase "ran from October 2021 to October 2023," the preparation phase "from November 2023 to October 2025," and in October 2025 the Governing Council decided to move to the next phase.

The key condition is legal. "If EU lawmakers adopt the regulation in the course of 2026, the digital euro could be issued during 2029," the ECB says, adding that "The decision on whether to issue the digital euro will only be considered at a later stage." The digital euro home page also describes preparations for a pilot in 2027 and a draft rulebook (version 0.91) published in July 2026.

The digital euro needs its own EU regulation. It runs on a separate legal track from MiCA, the EU rulebook for private crypto firms, covered in MiCA explained.

China's e-CNY

The People's Bank of China (PBC) describes a two-tier model: the central bank issues, and commercial institutions serve users. Its pilot programme page states that by 31 August 2022 the pilot areas had recorded "360 million e-CNY transactions with a total value of RMB100.04 billion," with "over 5.6 million stores" accepting it, across selected areas in 15 provinces and municipalities.

Those are the most recent PBC figures read for this post, so treat them as a 2022 snapshot. The same page describes privacy as "anonymous for small-value and traceable for large-value transactions," and mentions hardware wallets for situations "where there is no access to network or electricity."

India's e-rupee (e₹)

The Reserve Bank of India's Digital Rupee FAQ (updated 1 October 2026) says the retail pilot "is live with effect from December 2022." The wholesale version "is designed for use by financial institutions and intermediaries," and, as of that update, "there are 16 participants in the e₹-W pilot, which includes banks and non-banks."

Two design points stand out. e₹ wallets pay no interest, "Given the cash-like features of e₹." And the RBI is testing programmability, where "the funds in the CBDC wallets are used only for the specified purpose," with conditions such as expiry date, location or merchant category.

Did the BIS leave Project mBridge?

Yes. The BIS handed the project over to its partner central banks in October 2024, and its own page now lists mBridge as concluded.

Project mBridge is a shared platform where several central banks' wholesale CBDCs can settle cross-border payments directly. The BIS lists five partners: the Hong Kong Monetary Authority, the Bank of Thailand, the PBC's Digital Currency Institute, the Central Bank of the UAE and the Saudi Central Bank, which "joined in 2024."

The same page says "Project mBridge reached the minimum viable product (MVP) stage in mid-2024." Then, in the BIS's words, "The BIS announced in October 2024 that it was handing the project over to the partners." Whatever the partners build next is their project, not the BIS's.

For Gulf businesses, mBridge sits beside the region's crypto rulebooks rather than inside them. Our guide to UAE and Saudi crypto regulation covers VARA and the other regulators. The partner and settlement risks of moving money across borders are in our post on cross-border payment partner risk.

Is the US banning a central bank digital currency?

Executive Order 14178 of January 2025 prohibits US federal agencies, except where the law requires otherwise, from acting to establish, issue or promote any CBDC, at home or abroad; it is an executive order, not legislation.

Executive Order 14178, signed 23 January 2025, states a policy of "prohibiting the establishment, issuance, circulation, and use of a CBDC within the jurisdiction of the United States." Section 5(a) says that "Except to the extent required by law, agencies are hereby prohibited from undertaking any action" "to establish, issue, or promote CBDCs within the jurisdiction of the United States or abroad." The order also revoked the earlier Executive Order 14067 of March 2022.

What privacy questions do CBDCs raise?

Privacy is the most argued-over design choice, because a retail CBDC could, in principle, give one institution a view of a whole country's payments. Projects answer this differently.

Digital euro: the ECB's privacy page says "The data available to the ECB would be pseudonymised" and "The Eurosystem would not be able to directly link you to your payments." Banks and other intermediaries would access only the personal data needed to comply with EU law, such as anti-money-laundering rules. Offline, "The details of your offline digital euro payments would only be known to you and the recipient."
e-CNY: small payments anonymous, large payments traceable, per the PBC.
e₹: the RBI FAQ makes no specific privacy statement.

Note the ECB's word: "pseudonymised," not "anonymous." If you handle EU personal data, our GDPR essentials post covers what the law expects of you. India's equivalent rules are in our DPDP Rules 2025 guide.

What are the cyber-security and resilience risks of a CBDC?

A retail CBDC would be national payment infrastructure that millions of phones talk to. That brings three broad risks.

Availability. If the system or a large intermediary goes down, people cannot pay. Offline payments are partly a resilience answer to that.
Integrity. Money must not be created, copied or spent twice. That is hardest when a payment happens offline.
Fraud and account takeover. Scammers target whatever people use to pay. A new form of money also brings new fake apps and new "help desk" scams.

The BIS Innovation Hub's Project Polaris has published an offline payments handbook (May 2023) and a security and resilience framework (July 2023) for central banks working on these problems.

Going deeper: for security and IT teams

No CBDC-specific security standard was checked for this post, so the section below sticks to the mechanisms and design statements the central banks and the BIS publish, and turns them into a threat model and questions.

Offline payments and double-spending. Double-spending means spending the same funds in two different transactions. Online, a central ledger (or the intermediary's ledger) checks every payment, so spending the same unit twice is caught at once. Offline, neither party can ask the ledger, so the value and the spending rules have to live on the device.

The threat model follows from that. The attacker needs to break or clone the device that holds offline value: extract keys from a secure element, roll back the device's stored state, or replay a signed transfer. What they get is spendable money until the next sync. The mitigations to look for are hardware-backed key storage, monotonic counters that cannot roll back, low offline balance and transaction caps, device attestation, and detection plus device revocation when the wallet reconnects. The RBI FAQ says only that the e₹ offline feature "enables the user to transact in locations with limited or no internet connectivity"; it does not describe the mechanism, so ask your bank.

Privacy design and data minimisation. The ECB model splits knowledge: intermediaries hold the personal data EU law requires, such as for anti-money-laundering checks, while the data available to the ECB would be pseudonymised. Test that split in practice. Ask which party stores which fields, for how long, under whose access control, and whether pseudonyms are stable across payments (stable pseudonyms make linkage easier). Log access to transaction data, alert on bulk queries, and include re-identification in your insider and breach threat model.

Key and wallet security. For intermediaries, a CBDC wallet is a high-value credential. The RBI FAQ says an e₹ wallet "can be recovered using the same phone number / SIM on a new mobile device." That puts the SIM in the recovery path, so SIM-swap and number-port fraud belong in the threat model. Controls: step-up checks on recovery and new-device binding, cooling-off limits after recovery, and alerting on a device change followed quickly by large transfers. Wholesale participants holding signing keys for a platform such as mBridge face the same custody questions as crypto custodians; our wallet custody guide covers multi-party signing and its failure modes.

Resilience and DDoS. The central core may be well defended, but the public-facing surface is the intermediaries' apps and APIs. Plan capacity and rate limiting for peak load, map dependencies (cloud region, HSMs, telecom, identity provider), and rehearse failover. Offline capability is a business continuity control only if it is tested under real outage conditions.

Fraud. Programmability (RBI's purpose-bound funds) adds rules logic that can be misconfigured or abused, so treat it like payment-authorisation code: change control, peer review, and testing of edge cases such as expiry. Expect phishing that borrows the CBDC's name and fake wallet apps. Monitor app stores for impersonation and educate customers through official channels only.

What to ask your provider, vendor or regulator: - What is the offline value cap per device, and how is double-spending detected on resync? - Where are wallet keys generated and stored, and can they be exported? - Exactly which transaction fields reach the central bank, and are pseudonyms rotated? - What is the recovery process for a lost phone, and how is SIM-swap fraud prevented? - What uptime and incident-reporting commitments apply, and to whom?

What should a business do about CBDCs now?

Do nothing rushed. No project above asks businesses to act today.
If you take payments in the euro area, track the EU digital euro regulation and the 2027 pilot.
If you operate in India, ask your bank whether it offers e₹ and how its wallet recovery works.
If you settle cross-border payments through the Gulf, watch for announcements from the mBridge partner central banks themselves, not the BIS.
If you serve US customers, note that the current executive order bars federal agencies from working towards any CBDC. Stablecoin rules are the live issue there.
Add CBDC wallet apps and impersonation scams to your fraud awareness material once a CBDC reaches your market.

Key takeaways

A CBDC is a direct digital claim on a central bank. Retail is for the public, wholesale is for banks.
In the 2024 BIS survey, 85 of 93 central banks were exploring a CBDC. Wholesale work is further ahead.
The digital euro could be issued during 2029 only if EU lawmakers adopt the regulation in 2026.
The e-CNY and e₹ are in pilot. mBridge passed from the BIS to its five partners, including the UAE and Saudi central banks, in October 2024.
US federal agencies are prohibited from promoting or issuing a CBDC under Executive Order 14178.
The security hard parts are offline double-spending, linkable payment data, wallet recovery and availability under attack.

Sources

All read on 27 October 2026.