Central bank digital currency: building the future of digital money for banks

Central Bank Digital Currencies (CBDCs) offer secure, digital, and public access to a country’s central bank. This creates both opportunities and implications for retail, commercial, and central banks in terms of their strategy, business models, organizational structure, and technology. 

Here’s why CBDC matters in 2026, and why it’s going to become even more important development and experimentation continues to gain momentum. The design and implementation of CBDC around the globe has implications for retail, commercial, and central banks in terms of strategy, business models, organizational structure, and technology. 

Although CBDC currently generates broad public – and private – sector attention, attempts to digitize fiat money to transfer value or to pay for goods and services are not new. 

Understanding CBDC

CBDC is a digital form of fiat money – essentially legal tender – which is currency issued and backed by a country’s central bank. Unlike cryptocurrencies or stablecoins, which are often privately issued and may lack sovereign backing, CBDC represents the digital equivalent of cash with legal currency status. 

How CBDC differs from other digital and physical money

CBDC stands apart from other digital currencies like cryptocurrency because it’s protected, financially stable, and sovereign. As a digital liability of the central bank, it’s universally available to the public and institutions, and backed by national currency reserves.  

Figure – Differences between cryptocurrency and CBDC 

Key types of CBDC and how they’re used

1. Retail CBDC: can be used by the general public for everyday payments, supporting person-to-person (P2P), person-to-business (P2B), and business-to-business (B2B) transactions. 
2. Wholesale CBDC: intended for financial institutions and large corporations to safely manage bulk settlements, interbank transfers, and trade finance in a more transparent, efficient way.  

Retail CBDC use cases

• Financial inclusion: giving safe access to digital payments for the unbanked or underbanked populations, especially where banking infrastructure is limited. 
• Efficient domestic payments: simplifying and speeding up retail transactions to reduce dependence on cash or card systems. 
• Direct government payments: distributing subsidies, welfare payments, or tax rebates instantly and traceably using programmable smart contracts. 

Take the case of the Bahamanian SandDollar (B$), which offers digital currency access to island residents and tourists, especially targeting financial inclusion in remote regions where bank access is limited. 

Wholesale CBDC use cases

• Cross-border payments: making international settlements faster and more affordable by removing intermediaries and friction in foreign exchange (FX) and correspondent banking. 
• Trade finance: digitizing end-to-end processing of letters of credit, guarantees, and supply-chain financing in a transparent, traceable way. 
• Liquidity management: giving corporates real-time global cash pool visibility and instant treasury operations through blockchain-enabled tokens. 

Take the case of project mBridge, involving Hong Kong, China, Thailand, and the UAE, which uses CBDC to perform real-time cross-border corporate payment settlements on interoperable Distributed Ledger Technology (DLT) platforms. 

Core principles of CBDC design and deployment

Creating an effective CBDC system involves thoughtfully weighing trade-offs and following key principles set by leading bodies like the Bank for International Settlements (BIS). 

CBDC design needs to be driven by:  

• A smooth user experience (UX) that can work offline, to offer accessibility in all scenarios and to all users.  

• Financial inclusion must be prioritized, offering universal access regardless of geographic or economic barriers.  

• Affordability, supporting low or no transaction costs to drive adoption across all user groups. 

• Security and privacy embedded at the core, through robust cryptographic protections and encrypted data management.  

• Resilience, demanding an infrastructure that can withstand cyber threats and operational disruptions.  

• Interoperability, so CBDC systems can work seamlessly with existing payment rails and other digital currency frameworks. 

• Governance that’s underpinned by clear accountability and sovereign oversight, reinforcing trust and regulatory compliance.  

• Sustainability, using energy-efficient technologies that align with broader environmental goals.  

These principles collectively guide the design of a CBDC’s technical architecture, operating model, and regulatory framework. 

CBDC operating models: architectures that shape the ecosystem

CBDCs can be implemented through three primary operating models, each offering distinct advantages and challenges. 

• In the direct (single-tier) model, the central bank is solely responsible for issuing, distributing, and operating the CBDC. This structure provides maximum control and centralized oversight – but comes with high resource demands and creates a single point of failure risk. 

• The indirect (two-tier) model involves commercial banks acting as intermediaries, distributing the CBDC to end users on behalf of the central bank. This model is scalable and uses existing banking infrastructure. However, it requires a high level of trust and coordination between both parties. 

• The hybrid (intermediated) model combines both approaches, with the central bank maintaining the core ledger while intermediaries handle retail transactions. This structure balances control and innovation, but involves more complex technology coordination and regulatory considerations. 

Most global CBDC pilots use indirect or hybrid models, as they make innovation possible while maintaining system stability through collaboration with existing financial institutions. 

Technology components that make CBDC implementation possible

CBDCs use a combination of advanced technologies that provide security, transparency, and scalability: 

• Ledger: a tamper-proof, shared ledger (often blockchain or DLT based) that records transactions.  

• Consensus mechanisms: algorithms determine how transactions are validated to balance speed, security, and scalability. 

• Smart contracts: programmable features that make conditional payments, automation, and customized transaction logic possible. 

• Privacy and confidentiality: encryption and privacy-preserving technologies to protect user identities, with traceability controls. 

• Interoperability: ability to interact easily with other CBDCs, traditional payment rails, and financial systems. 

Wallets: digital interfaces for users to store and transfer digital currency, designed for high security, recoverability, and usability. 

Commercial banking and CBDC: opportunities and challenges

Adopting CBDC promises significant benefits for commercial banks across products, operations, and strategy: 

Conclusion: Why businesses should watch the CBDC evolution 

The future of money is digital, sovereign, and inclusive. CBDCs are moving fast from concept to reality, reshaping global financial services. Although the path forward includes technological, regulatory, and social challenges, the benefits – increased efficiency, financial inclusion, cost reduction, and new business models – are substantial. 

Banks, corporates, and policymakers should actively engage in CBDC dialogues, pilot projects, and ecosystem building to: 

• Take advantage of emerging revenue streams. 
• Improve operational efficiencies. 
• Position themselves strategically in the evolving digital currency landscape. 

For detailed insights, case studies, and strategic guidance on CBDC development and implementation, download the full Capgemini report.  

And for comprehensive analysis, best practices, and industry perspectives that will inform your business strategy in this transformative domain, Capgemini can help. 

About Capgemini 

Capgemini supports central banks in designing and implementing CBDCs through a range of services spanning research, consulting, and technology enablement. As the demand for digital money rises and cashless economies evolve, Capgemini helps firms explore viable CBDC models, align with regulatory frameworks, and define clear deployment strategies. The team provides advisory services and develops proof-of-concepts to test use cases like cross-border payments and financial inclusion. Capgemini also focuses on building secure, scalable infrastructure with strong interoperability to ensure CBDCs integrate seamlessly with existing payment systems. Through its Decentralized Futures offering, Capgemini empowers central banks to create inclusive, resilient, and future-ready digital currencies.