Recent Developments in CBDCs

Just a few years ago, over one hundred countries were exploring projects for central bank digital currencies (CBDCs). Many of these initiatives have since been shelved as privately issued stablecoins gained prominence.

Nevertheless, signs suggest that CBDCs are experiencing renewed momentum. A notable example is China’s digital yuan (e-CNY), which has processed approximately $2.37 trillion in transactions over the past two years.

The growth of CBDCs is driven by several factors, including strong government support. For instance, China has banned cryptocurrencies and tokenized assets, including those backed by the yuan.

In addition, China has positioned the digital yuan at the heart of Project mBridge, a cross-border payments platform launched in 2022 by a consortium of central banks, initially led by the Bank for International Settlements (BIS). Although BIS stepped away from the project two years later, it now includes UAE, Thailand, Saudi Arabia, Hong Kong, and China. In early 2026, transaction volumes on the platform surpassed $55 billion, with the digital yuan accounting for over 95% of that total.

Objectives and Challenges

A primary goal behind these efforts is to strengthen China’s currency, the yuan, in global trade and challenge the dominance of the U.S. dollar and its stablecoins. This objective has become a common theme in renewed CBDC initiatives elsewhere, such as South Korea’s revived trials for the digital won.

Lawmakers in the European Union have also reprioritized their focus on the digital euro, recently asking payments firms to guide the CBDC through its pilot phase. Despite years of debate and delays, the digital euro now appears poised for a potential launch late next year.

Encouraging Retail Adoption

Concerns around privacy, security, and infrastructure have slowed progress. In contrast, government mandates mean the digital yuan faces a smoother path to consumer adoption. To expedite this process, China has introduced features such as interest-bearing e-CNY balances and protection under the country’s deposit insurance system.

Despite strong government support, the digital yuan still competes with an entrenched retail payments landscape dominated by super apps like Alipay and WeChat Pay in China.