The CBDC Crossroads: Power, Privacy, and the Battle for Digital Currency Leadership

As digital payments become the norm, central banks around the world are rethinking the role of state-backed money in the digital age. This article examines the divergent approaches to central bank digital currencies (CBDCs), from the United States’ freeze on development to China’s rapid rollout of the e-CNY and Europe’s cautious progress toward a digital euro. It also explores the experiences of early adopters such as the Bahamas, Nigeria, and Jamaica, highlighting the challenges of driving adoption. As global powers chart competing paths, the question remains: who will shape the future architecture of digital money?

Source: © 2025 Digital & Analogue PartnersGeneral Overview of CBDCs

As money and payments have become increasingly digital, central banks worldwide grapple with whether to issue their state-backed digital currencies. A Central Bank Digital Currency (CBDC) is virtual money backed and issued by a central bank — effectively a digital version of a country’s official currency. Unlike decentralised cryptocurrencies such as Bitcoin — or even stablecoins that peg their value to fiat currencies, such as USDT, USDC — CBDCs come with full state backing, effectively making them as stable as the paper currency issued by a central bank. Moreover, they enjoy legal tender status within their respective jurisdictions.

The two main types of CBDCs are:

• Retail CBDC. Retail CBDCs are designed for everyday use by the general public. Individuals and businesses would hold digital wallets to pay one another directly.
• Wholesale CBDC. Wholesale CBDCs are intended primarily for financial institutions, such as commercial banks and large-scale payment providers, to settle interbank transfers.

According to the Atlantic Council’s CBDC tracker, over 130 countries — roughly 98% of the global economy — are in various stages of exploring CBDCs. Many governments are convinced that CBDCs could modernise financial systems, reduce transaction costs, and create more equitable and transparent payment networks. For emerging markets, the promise of financial inclusion is an additional lure; a state-backed digital currency could, in theory, bring millions of unbanked individuals into the financial system.

Nevertheless, CBDCs also spark significant privacy concerns. Critics warn that a state-backed digital currency invites data collection on a vast scale — turning money into a potential surveillance tool. While monetary authorities worldwide deny any plan for intrusive monitoring, the fear persists among privacy advocates — and it has now found a prominent champion in the 47th U.S. president.

Source: © 2025 Digital & Analogue PartnersThe United States: Trump’s Freeze on CBDC Projects and the Rise of Private Solutions

On January 23, 2025, U.S. President Donald Trump signed a sweeping executive order that bans any effort to establish a U.S. central bank digital currency, commonly called the “digital dollar.” The decision immediately prohibits any U.S. government agency from “undertaking any action to establish, issue, or promote” CBDCs. While the Federal Reserve had never formally committed to issuing a retail-focused CBDC, the new order pulls the plug on all exploration or development of a digital dollar.

The administration’s argument goes beyond the widely discussed issue of safeguarding privacy. From Trump’s perspective, a digital dollar could threaten U.S. leverage in international affairs by creating payment trails that are less dependent on existing U.S.-controlled infrastructure. The move effectively ended projects like Project Hamilton, Project Cedar, and Project Agorá, which the Federal Reserve had been researching.

In light of the prohibition on CBDCs, privately issued stablecoins, such as USDC and USDT, may emerge as a de facto digital currency in the U.S. These stablecoins are increasingly employed in digital transactions and are regarded as a bridge between traditional finance and the cryptocurrency milieu. The administration’s endorsement of stablecoins indicates that they will have a significant role in the U.S. digital financial landscape, addressing the void created by the absence of a CBDC. This strategy allows for innovation while maintaining the government’s arm’s length relationship with digital currencies. However, it also raises questions about regulation and oversight, which the newly established Presidential Working Group on Digital Asset Markets must address.

By vacating the CBDC arena, the United States may have inadvertently left room for other major powers — particularly China and the European Union — to set standards for globally interoperable digital currencies. This has raised questions about whether America’s retreat will speed up foreign efforts to make their own CBDCs dominant in global finance.

Source: © 2025 Digital & Analogue PartnersEurope’s Measured Approach to a Digital Euro

Away from the rapid shifts of White House executive orders, Europe has adopted a more measured — some might describe it as painstakingly slow — approach to digital currency. In October 2021, the European Central Bank (ECB) initiated a “preparation phase” for a retail CBDC, aiming to create a digital euro that exists alongside, rather than in place of, physical cash. By December 2024, the ECB had published its second progress report, which included a draft rulebook detailing the technical and regulatory framework. The forthcoming significant milestone is set for October 2025 when the ECB plans to develop an outreach strategy, procurement standards, and identify technology providers.

Why does the EU want a digital euro?
Europe recognises the necessity to “prepare our currency for the future,” as ECB President Christine Lagarde has emphasised. The decline of cash, the rapid rise of private payment solutions like cryptocurrencies, and the dominance of non-European card networks have all prompted European policymakers to pursue a public digital alternative — one that ideally is free to use, upholds high standards of privacy, and remains under the ECB’s oversight. It is also regarded as a means to preserve monetary sovereignty and lessen excessive dependence on external financial networks.

Key complexities and security considerations.
ECB officials stress that the digital euro should not undermine commercial banks or radically disrupt the Eurozone’s monetary policies. Regulators are, therefore, treading carefully to balance innovation with traditional financial stability. Privacy is also a high-profile issue: the ECB promises the digital euro will have “cash-like” features, yet European legislation in recent years has seen moves toward restricting end-to-end encryption and imposing stricter controls over large cash transactions. This regulatory environment has led to scepticism among some citizens and businesses, who wonder whether a state-issued digital currency might facilitate more surveillance than ever before.

Although the ECB’s “preparation phase” will continue for at least another year, the question remains: Will Europe’s digital euro be ready before other powers — namely China — fill the vacuum left by Washington’s absence? China’s rapid progress in CBDC development starkly contrasts the EU’s slower legislative grind. Yet if there is one area where the European Union excels, it is in building robust regulatory frameworks — a factor that could ultimately bolster the digital euro’s credibility. That determination may pay off if the digital euro does, ultimately, become the de facto Western-led CBDC.

Source: © 2025 Digital & Analogue PartnersChina: Rapid Leadership in the CBDC Race

Already well underway before Trump’s executive order, China’s “e-CNY” program stands out as the world’s largest CBDC pilot — and potentially the most advanced. The People’s Bank of China (PBoC) launched testing in 2019, initially focusing on retail transactions in major urban centers. By June 2024, transaction volumes had reached a staggering 7 trillion yuan (around US$982 billion), nearly quadrupling the 1.8 trillion yuan recorded at the end of June 2023. The number of personal e-CNY wallets reached 180 million by July 2024.

What began as a localised pilot in four cities has now spread to 17 provincial-level regions, encompassing both retail and wholesale use cases. Commercial banks and technology firms, including AliPay, have integrated e-CNY features into their platforms, allowing consumers to pay for anything from groceries to online services.

China’s ambitions also stretch beyond domestic borders: through the mBridge initiative, the PBoC is collaborating with Thailand, the UAE, Hong Kong, and more recently Saudi Arabia to test wholesale CBDC interoperability.

Chinese authorities highlight efficiency, technological self-reliance, and monetary sovereignty as core reasons for e-CNY’s development. However, e-CNY also aligns with broader BRICS trends. All original members — Brazil, Russia, India, China, and South Africa — are piloting a CBDC. These countries seek alternative payment rails that reduce dependence on the U.S. dollar and traditional Western-led infrastructure like SWIFT.

Source: © 2025 Digital & Analogue PartnersEarly CBDC Adopters: Bahamas, Nigeria, and Jamaica

While major economies debate, some smaller nations have already forged ahead. The Central Bank of The Bahamas launched the “Sand Dollar” in 2020, making it the first fully operational CBDCs in the world. Nigeria introduced the “eNaira” in late 2021 to promote financial inclusion and reduce transaction costs. Jamaica followed with “JAM-DEX.”

The Bahamas: The Sand Dollar The Sand Dollar was aimed at enhancing financial inclusion, particularly for residents on remote islands. The digital currency was made available to all Bahamian citizens upon release, with a gradual integration into the commercial banking system. As of 2024, the Central Bank of the Bahamas reported that the amount of Sand Dollars in circulation reached $2.1 million, with approximately 120,000 consumer wallets. To further institutionalise the Sand Dollar, the Central Bank is working on new regulations requiring commercial banks to offer it. Additionally, efforts are underway to achieve full interoperability between various wallet providers.

Nigeria: The eNaira Nigeria’s eNaira, launched in October 2021, faced significant resistance from the population, partly due to distrust in government financial policies. Initially, only bank account holders could access it, but later phases included expansion to the unbanked. As of July 2023, just 0.5% of Nigerians adopted the eNaira, and 98.5% of eNaira wallets remained inactive a year after its launch. In August 2024, there were 4.14 billion eNaira in circulation, representing less than 1% of the currency in circulation in the country.

Jamaica: The JAM-DEX Jamaica’s JAM-DEX was officially rolled out in July 2022, allowing transactions through digital wallets and expanding to additional wallet providers. To incentivise usage, the central bank introduced two programs in April 2023 — one targeting small and micro-merchants and another offering a loyalty program for wallet holders. As of January 2025, approximately J$258.4 million in JAM-DEX is in circulation, representing just 0.09% of the total money supply.

One key takeaway from these early projects is that simply launching a CBDC does not guarantee usage — strong incentives, payment infrastructure development and trust-building measures are necessary.

Conclusion

The global landscape of digital currencies is rapidly evolving, with various approaches emerging across nations. The U.S. freeze on CBDC development and its endorsement of private sector stablecoins contrasts sharply with China’s swift e-CNY expansion and Europe’s methodical progress towards a digital euro. This fragmentation sets the stage for an intriguing future in digital finance.

In the absence of a CBDC option for the American dollar, privately issued stablecoins, particularly in the U.S., may become the de facto digital representation of the dollar in the digital economy. Other countries may also follow a similar path and promote the use of new forms of digital money for payments — stablecoins — by adopting specific crypto regulation.

At the same time, China’s e-CNY has achieved significant domestic adoption, with transaction volumes close to $1 trillion. The mBridge initiative, involving collaboration with Thailand, the UAE, Hong Kong, and Saudi Arabia, signals China’s ambitions for cross-border CBDC interoperability.

Europe, meanwhile, is adopting a measured approach with its digital euro project, emphasising privacy safeguards and interoperability with legacy systems. This could position the EU as a potential standard-setter for Western-aligned democracies, albeit at a slower pace than China’s rapid deployment.

Early CBDC adopters like the Bahamas, Nigeria, and Jamaica offer valuable lessons, highlighting that technical deployment alone does not guarantee adoption. Success requires hybrid models combining decentralised architectures with centralised trust-building mechanisms.

The interplay between government policy, private sector innovation, and global financial trends will ultimately determine the future of digital currencies. As nations grapple with issues of monetary sovereignty, privacy, and geopolitical influence, the architecture of digital money could reshape global trade, economic alliances, and the very nature of how we move value across borders and what form of money we use for payments.

Alexandra ZviagintsevaYasmin KomshilovaThis article was written by Alexandra Zviagintseva & Yasmin Komshilova of Digital & Analogue Partners. Visit dna.partners to learn more about our team and the services.Be digital, be analogue, be with us!

The CBDC Crossroads: Power, Privacy, and the Battle for Digital Currency Leadership was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.