The United States is Unfocused on CBDCs
The United States has been grappling with the idea of a central bank digital currency (CBDC) for years, yet no definitive action has been taken. Policymakers have studied the concept extensively, issued reports, and engaged in debates, but the country remains unfocused on developing and implementing a digital dollar.
CBDCs are digital counterparts of traditional fiat currencies, backed by governments to enhance financial inclusion and modernize payment systems. These digital currencies offer greater accountability and stability in the face of growing electronic payment transactions and declining cash usage. They also address financial instability concerns posed by unregulated digital assets such as meme coins, tokenized assets, and stablecoins.
There are two types of CBDCs: retail CBDCs for the general public and wholesale CBDCs for interbank transactions. While many countries are progressing in CBDC development, the United States is heading in the opposite direction.
The US CBDC Ban
On January 16, 2025, Scott Bessent, the newly confirmed Secretary of the Treasury under President Donald Trump’s administration, opposed the introduction of a CBDC, citing economic and privacy concerns. Soon after, on January 23, President Trump signed an executive order banning the establishment, issuance, circulation, and use of CBDCs in the country. Many in the financial sector support this decision, arguing that a CBDC could reduce the utility of the U.S. dollar by increasing financial surveillance and limiting privacy. Instead, some experts advocate for a competitive landscape of stablecoins and tokenized assets as a better alternative to a state-controlled digital currency.
Global CBDC Development
Despite the United States’ reluctance, the rest of the world is moving forward with CBDC initiatives. The Atlantic Council’s CBDC tracker shows that 66 out of 134 monitored countries are actively exploring digital currencies, with China leading the way. Nigeria, Jamaica, and the Bahamas have already launched their own CBDCs, while European and Asian countries are advancing pilot programs.
China’s digital yuan (e-CNY) is the most widely used CBDC, with 260 million wallets in 17 provinces. Transactions reached 7 trillion yuan ($982 billion) as of mid-2024. The Chinese government has expanded e-CNY use cases to include public transportation, income tax payments, and even digital versions of traditional red packets (Hongbao). Furthermore, China has been actively developing cross-border CBDC payment solutions, collaborating with countries like India, Indonesia, Thailand, Singapore, Japan, and South Korea.
Red Date Technology, a Hong Kong-based company, has played a significant role in global CBDC projects. The company co-founded the Blockchain-Based Service Network (BSN) in China and the Universal Digital Payments Network (UDPN), facilitating cross-currency transactions and settlement of different digital currencies, including stablecoins and tokenized assets.
The European Central Bank’s CBDC Initiative
The European Central Bank (ECB) has been exploring both retail and wholesale CBDCs since 2020. In response to the U.S. ban, the ECB announced plans to expand its wholesale CBDC platform to facilitate cross-border transactions and integrate tokenized financial assets within a blockchain-based infrastructure. The initiative will require harmonized regulations across the Eurozone and potentially beyond.
Conclusion
While the United States has stepped away from CBDCs, most of the world is moving toward the digitization of national currencies. The Bank for International Settlements continues to support CBDC research and cross-border pilot projects, particularly after the disruptions caused by the COVID-19 pandemic. Experts predict that digital fiat currencies are inevitable, and stablecoins may continue to displace traditional banking systems in the U.S. as the world adopts CBDCs.
Of the G20 nations, 19—including major economies such as China, the European Union, India, and Japan—are actively developing CBDC programs. The United States’ decision to abandon CBDC development may set it apart from the global trend, but as some experts point out, there will always be a market for traditional paper money and ancient coins.