Can a state-issued token and a private token both reshape how people send money?
This piece frames a contest between public, bank-backed currencies and privately issued tokens, such as stablecoins, aiming to speed payments and cut costs.
Over 130 countries are testing central bank digital initiatives, while tokens like USDT and USDC operate on public blockchains for payments, contributing to the evolving landscape of cbdcs stablecoins.
The UK matters: the Bank of England studies a digital pound as the US rejected a retail central bank option in 2025, a decision that is closely followed in stock market news.
Readers will see how design and pilots shape tradeoffs in inclusion, privacy, and stability, mapping scenarios for state, private, or hybrid models in payments.
Key Takeaways
- State and private models both promise faster, cheaper payment rails.
- More than 130 countries are exploring central bank options while private tokens scale on public chains.
- UK policy and EU tests will influence design choices on privacy and distribution.
- US policy shifts have refocused debate onto regulation of private issuers.
- Outcomes range from dominant public systems to hybrid arrangements that blend both models.
Setting the scene: digital money in the present UK and global context
From Beijing to Bridgetown, authorities test new money forms. Over 130 jurisdictions are piloting cbdcs through 2024–2025, while firms use privately issued tokens for transfers.
In the UK, the Bank of England is working on a digital pound as the FCA tightens crypto oversight, affecting business risk management.
Globally, pilots range from China to Nigeria. The ECB prepared the digital euro in late 2023, while US policymakers rejected a retail cbdcs option in 2025, shifting to stablecoins.
On public blockchains like Ethereum, privately issued tokens serve as settlement media for remittances.
These trends reshape payments and finance, setting the scene for comparisons of governance and technology.
Defining the contenders: what are CBDCs and what are stablecoins?
Central banks and private issuers offer different designs for digital money, each built around distinct legal and technical claims.
Retail and wholesale roles
A CBDC is a digital legal tender issued by a central bank. It can be retail, available to households and firms, or wholesale for settlement between financial institutions.
Central banks cite inclusion, faster and cheaper payments, and programmable features as core motivations. Retail models may be account‑based or token‑based and usually use regulated intermediaries to distribute access.
Wholesale designs target interbank settlement, offering atomic transfers and improved resilience for high‑value clearing.
Types of pegged tokens
Private tokens are pegged to outside references and come in different reserve styles.
- Fiat‑collateralised coins such as USDT and USDC hold cash and short‑dated securities to support redeemability.
- Crypto‑collateralised designs like DAI over‑collateralise with on‑chain assets and use protocols to manage pegs.
- Hybrid or algorithmic models (for example Frax and the UST episode) can lower collateral needs but add depeg risk.
“Issuer governance — including freezing or blacklisting — shapes compliance and user risk.”
| Feature | Central bank option | Privately issued token |
|---|---|---|
| Legal status | Direct liability of central bank | Private liability; pegged to reference asset |
| Primary aim | Inclusion, policy, payment efficiency | Liquidity, remittances, programmable use |
| Governance tools | Regulatory control via central banks and intermediaries | Issuer controls, protocol rules, on‑chain governance |
Key similarities: speed, stability, aims, programmability, and inclusion narratives
Policy pilots and market solutions aim to move value instantly without business‑hour limits. Both seek to cut costs and enable near‑instant transfers that legacy systems can’t match.
Always‑on payments and cross‑border potential
Both cbdcs and stablecoins offer 24/7 availability and faster settlement, enhancing user experience for transactions and remittances.
Each targets price stability for predictable purchasing power, with trust from sovereign backing or reserve management.
Programmability allows conditional payments, automated compliance, and new merchant services, emphasizing mobile wallets and lower fees for underserved groups.
- Near‑instant settlement and round‑the‑clock uptime improve transaction efficiency.
- Both promise parity with fiat for predictable purchasing power.
- Cross‑border payments can bypass correspondent chains via on‑chain settlement.
| Shared aim | Practical example | Expected benefit |
|---|---|---|
| Speed | Real‑time transfers in pilots and remittance corridors | Faster receipts, lower float costs |
| Stability | Sovereign liability or reserve backing | Predictable purchasing power |
| Programmability | Smart contracts and conditional payouts | Automated compliance and new services |
“For users, both approaches aim to make everyday transactions simpler, cheaper and more reliable.”
Who issues and governs the money: central banks versus private issuers and protocols
Who mints and manages a monetary token changes its legal status and everyday utility. In many jurisdictions, a central bank issues retail tokens through permissioned ledgers. Such designs make cbdcs sovereign liabilities and often rely on intermediated distribution via regulated banks.
Central banks set supply rules, ledger access and operational policy to align money with monetary aims. This public stewardship gives clear recourse channels and statutory backing for users.
Private issuers and protocols operate differently. Market‑led tokens run on public chains but depend on issuer reserves, redemption policies and on‑chain rules. Issuers can freeze or blacklist addresses to meet compliance duties.
- Public sector role: sovereign backing, formal oversight and defined legal recourse.
- Market role: reserve management, rapid innovation and protocol governance by firms or communities.
The locus of control shapes debates on privacy, censorship and user rights across the payments system.
Adoption and pilots around the world
Real‑world trials reveal that local needs shape how new monetary tokens gain traction.
Public launches and national experiments
China’s e‑CNY recorded nearly ¥7 trillion (~$1T) in transactions by mid‑2024 and about 180m wallets, yet use concentrates in specific cities and merchant types.
The eNaira remains below 1% of currency in circulation, showing how incentives and digital literacy affect uptake. The Bahamas Sand Dollar and Jamaica’s JAM‑DEX operate as live projects aimed at inclusion and resilience. The ECB moved the digital euro into a preparation phase in late 2023. The US government rejected retail issuance in 2025, refocusing oversight on private tokens.
Market‑led tokens and regional uptake
Private tokens such as USDT and USDC have seen practical use across Sub‑Saharan Africa and Latin America for remittances and inflation hedging. They scale through wallets, exchange integrations and market demand rather than mandates.
“Where local currency instability or capital controls exist, dollar‑pegged tokens often gain rapid traction.”
- Geography and incentives shape acceptance more than technology.
- Pilot stalls often reflect user‑experience frictions, trust gaps and merchant acceptance.
- Market tokens leverage existing crypto rails for faster global distribution.
| Project | Key data | Primary takeaway |
|---|---|---|
| e‑CNY (China) | ¥7T processed; ~180m wallets | High volume but limited scope |
| eNaira (Nigeria) | Adoption hurdles; incentives lacking | |
| Sand Dollar / JAM‑DEX | Launched, live use | Island resilience and inclusion focus |
| USDT / USDC | Widespread in Argentina, Nigeria, Venezuela | Scaled via exchanges and wallets for remittances |
Summary: Practical rollout depends on trust, merchant networks and easy access. Technical design matters, but local context determines success or the risks of stagnation.
Policy makers in major jurisdictions are converging on frameworks to balance innovation with consumer safety.
EU regulators enacted MiCA to set rules for issuers, custody and market conduct while the ECB moved the digital euro into a preparation phase in late 2023.
MiCA and preparation for a new euro option
MiCA provides a clear authorisation route for large issuers and sets reserve and disclosure standards.
This reduces uncertainty for firms and supports cross‑border interoperability with supervisory oversight.
United Kingdom oversight and central exploration
The Bank of England continues research on potential bank digital currencies while the FCA tightens rules for cryptoasset firms.
UK rules aim to protect consumers and keep markets resilient as firms adopt on‑chain payments.
United States posture after 2025
An executive decision in 2025 rejected a retail central bank digital option and shifted focus to private token regulation.
Supervisors now emphasise reserve standards, redemption rights and operational resilience for issuers used in payments.
Monetary policy and banking system impacts
New token designs can give policymakers direct levers over short‑term holdings and market liquidity.
Payments, remittances and decentralised finance: real‑world use cases today
Practical deployments today show how programmable money intersects with remittances and market liquidity.
Remittances and cross‑border settlement efficiency
Low‑cost transfers now use pegged tokens to cut fees and speed corridors across Sub‑Saharan Africa and Latin America.
These arrangements reduce reliance on costly intermediaries and shorten settlement times for common retail payments and cross-border payments.
DeFi collateral, trading liquidity and on‑chain finance
On public networks such as Ethereum, Tron and Solana, stablecoins power lending, quoting and yield strategies.
They act as core collateral and quoted assets that support decentralised finance and broader market depth for digital assets.
“On‑chain settlement gives firms clearer audit trails and faster reconciliation for routine transactions.”
- Programmability automates payouts and subsidy distribution in CBDC pilots like DCash or transport use in China.
- Finality on public chains aids risk management for merchants and banks.
- User experience and merchant acceptance remain the gating factors for mass uptake.
| Use case | Primary benefit | Example |
|---|---|---|
| Remittances | Lower cost; faster receipt | USDT/USDC corridors into Latin America |
| Retail disbursements | Targeted, auditable payments | DCash welfare trials |
| DeFi liquidity | Collateral and quote asset | Ethereum pools supporting trading |
Stablecoins vs CBDCs: which will dominate the digital economy?
User choice, merchant networks and legal status are deciding where new payment rails gain real traction.
Market‑led tokens already move significant volumes on public chains and underpin remittances, trading and merchant payments in several regions.
Public pilots advance more slowly. CBCDs offer sovereign backing and clear legal recourse, but uptake so far is mixed; the US rejected a retail option in 2025 while the ECB moved a euro option into preparation.
Adoption depends on regulation, privacy design and interoperability. Control, programmability and confidence in value preservation will steer which rails people prefer.
“The outcome is unlikely to be winner‑takes‑all; domains of strength may remain distinct for years.”
- Market tokens: fast scale in dollarised corridors and on‑chain finance.
- Public tokens: statutory trust, slower user pull but strong regulatory footing.
- Coexistence is likely where public money supplies trust and private rails supply innovation.
| Feature | Market token | Public token |
|---|---|---|
| Adoption speed | Rapid in certain corridors | Gradual, policy‑led |
| Legal status | Private liability | Sovereign liability |
| Strength | Network effects, liquidity | Regulation, tax and official use |
Future scenarios: coexistence, competition, or integration
Policymakers and market builders are sketching a small set of plausible pathways for how new monetary rails might coexist or converge.
Backbone of regulated finance versus open, interoperable networks
One path treats central bank tokens as the backbone of regulated finance, with private issuers operating at the edge to offer specialised services.
In that model, firms use trusted sovereign balances for settlement and rely on private rails for speed and developer tools.
Another path elevates open networks as primary rails. Central banks then connect via bridges and common standards to preserve policy aims.
Conclusion: Stablecoins vs CBDCs: which will dominate the digital economy?
Practical experience from pilots and corridors points to a blended payments landscape. Both market tokens and public options solve real problems, but they answer different governance and policy goals. Stablecoins scale fast where speed, dollar exposure, and open access matter. CBCDs advance with legal clarity and public guarantees that support state functions and safety nets.
For the UK, planning should assume coexistence. Focus on interoperability, consumer protection, and fair competition. Design choices on privacy, access, and offline use will shape inclusion and trust.
Organisations should prepare multi‑rail strategies as standards and policies evolve. A mixed landscape is the most likely path for the near future of the economy.
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