The global rush to central bank digital currencies

Central bank digital currencies (CBDCs), as defined by the International Monetary Fund, are government-backed digital versions of national currencies that are safe, stable and centrally regulated.

However, they are not just a slow evolution, but a rapid response to an accelerating financial revolution. And they are a direct response to the rise of unregulated cryptocurrencies that threaten to circumvent traditional monetary systems and affect the stability of their financial and economic systems.

This shift is not limited to a specific country or region, as central bank digital currencies are no longer in the experimental stage.

As of July 2025, there are 137 countries in Asia, Africa, Europe and the Americas, including China, India, Nigeria and Brazil, that are exploring, developing or experimenting with digital currencies, compared to only 35 countries in 2020, according to data from the Atlantic Council.

China at the forefront

China has taken the lead in the industry, with the Chinese digital currency, the “digital yuan”, reaching 7 trillion yuan ($986 billion) in transactions in 17 provinces across the country in June 2024, covering sectors such as health, tourism and education.

In India, the “digital rupee” transactions reached more than 10 billion rupees ($122 million) in March 2025.

Why the global rush?

The global rush to digital currencies is because central bank digital currencies offer governments tools they have long needed: A means to combat shadow economies, tighten controls, combat suspicious financial transactions such as money laundering and illicit trade – as well as increase tax revenues.

But perhaps the biggest prize, especially for developing economies, is the contribution to financial inclusion. Digital currencies can bring unbanked people into the formal financial system, making saving, borrowing and transactions easier and safer for people in rural and remote areas.

A virtuous circle

Greater reliance on these currencies means more people are using digital wallets instead of saving cash at home. This in turn benefits banks by increasing deposits and expanding their lending capacity – thereby boosting economic growth and resilience.

Digital currencies can also improve the efficiency of government spending by providing better data on population needs, income levels and gaps in services.

Metadata around each transaction, such as the receipts, can be attached to individual transaction records that can be used to obtain granular information about consumption.

This enables the creation of knowledge that can help direct funds exactly where they will have the greatest impact. When oversight improves, corruption becomes more difficult.

The road ahead is not easy

Many countries lack the digital infrastructure to support widespread use, such as reliable connectivity, secure payment systems, blockchain technology, data centers – as well as the skills and expertise needed to build and maintain these systems. There is also human nature to consider.

Convincing billions of people to give up cash in favor of a digital alternative will require more than just infrastructure. It will take trust, education and smart communication.

It will also require targeted advertising campaigns to motivate large segments of the population to use digital currencies.

A current necessity

It is not just a vision for the future, but a present necessity. Central bank digital currencies are the answer of central banks to a rapidly changing financial world driven by technology.

If countries stand still and fail to provide a suitable alternative that meets the aspirations of individuals and investors, traditional savings will continue to leak into unstable and unregulated crypto-assets.

Deduction

The best way forward is not an overnight revolution, but a thoughtful rollout that starts small and builds trust.

The end goal is clear: A digital, secure and inclusive financial system for everyone, because the days of paper money are numbered. The question is: How quickly and carefully can we move towards this future?

Editor’s note: This feature first appeared in Arabic in Al Eqtisadiah, the Saudi business newspaper.