The State of Central Bank Digital Currencies in 2025 and Beyond

The State of Central Bank Digital Currencies in 2025 and Beyond

Summary

This report provides an overview of the current state of CBDCs, first looking at the whole digital currencies market and the motivations for CBDC development. It discusses the distinction between wholesale and retail CBDCs as well as the complexities involved in managing retail CBDCs at scale. It also assesses the opportunities and challenges of CBDC implementation around four main domains: domestic payments innovation, cross-border efficiencies, financial inclusion, and monetary and financial stability. The report also discusses design considerations for wholesale and retail CBDCs. It finishes with a summary of key observations on the cryptocurrency and CBDC markets, as well as the near-term future outlook globally.

While the crypto market has not fully realized its initial vision of a decentralized financial system, it is now poised to enter mainstream use in the coming years. However, there is a risk of overheating in the crypto market leading to a speculative bubble. CBDCs will have a significant impact on payment innovation, financial inclusion, and stability, but there are challenges related to privacy protection, technical infrastructure, and interoperability with existing systems. Looking ahead, the success of CBDCs will depend on achieving a balanced design that fosters innovation without compromising stability or trust. As countries refine their CBDC pilots, the lessons learned will shape the global outlook on CBDCs, making collaborative efforts essential for realizing the promised benefits of CBDC adoption.

Scope

• Cryptocurrencies have the potential to go mainstream in 2025 on the back of expanding active use cases and facilitating networks, supported by increasingly favorable regulation.
• CBDCs fundamentally differ from cryptocurrencies, as CBDCs are national governments’ direct response to the emergence of private digital currencies (incl. cryptos) and other nations’ CBDCs, as these can carry monetary or social destabilizing risks.
• Wholesale CBDC is closer to realizing the real benefits than retail CBDC, given the more complex technical and regulatory requirements for the implementation of the latter.
• Although the interoperability of infrastructures remains the key challenge to tackle, successful CBDC implementation will equally depend on identifying and demonstrating tangible benefits for use.

• Understand the key differences between cryptocurrencies and CBDCs, between wholesale and retail CBDCs, and the opportunities and challenges of both.
• Gain a comprehensive overview of the current rate of crypto uptake and CBDC development globally and understand the reasons behind these trends.
• Identify any potential impact that a wider CBDC rollout could have on your business.