The Twin Era of Digital Cash: Future Collaboration Outlook Between State Currencies and Market Currencies

Original Author: Bai Qin Jen, Evan Lee

Introduction

The concept of “money” is standing at the brink of a major transformation. In the future, should money be issued by the state or handed over to the market?

— Perhaps, the answer is not a binary choice.

As countries accelerate the rollout of “Central Bank Digital Currencies” (CBDCs), another type of “stablecoin” born from the market yet legally recognized has quietly entered the global financial system. They are not opponents but more like two partners continuously adapting to each other. Their coexistence and collaboration will redefine every payment and transaction we make—whether in USD, EUR, or RMB. This silent revolution is writing the rules for future money.

Stablecoins VS CBDCs

While stablecoins and central bank digital currencies (CBDCs) are often discussed together, their origins and missions are entirely different.

• Stablecoins are created by the market

They are created by enterprises or institutions, growing in the open soil of blockchain, inherently suitable for fast digital payments, cross-border transfers, and decentralized finance. Although they are subject to regulation, they still retain a certain degree of privacy, with clear advantages in speed and flexibility.

• CBDCs are led by the state

Issued directly by central banks, their core mission is to maintain monetary sovereignty, strengthen financial regulation, and serve the public interest. Each transaction is usually traceable, facilitating regulatory oversight and monetary policy implementation. The goal of CBDCs is not to eliminate stablecoins but to provide a reliable national-level foundation for the entire digital currency ecosystem.

In fact, they are forming a division of labor and cooperation relationship:

• CBDC mainly domestically: more suitable for domestic daily payments, policy regulation, and other “onshore” scenarios
• Stablecoins mainly offshore: perform better in cross-border payments, crypto finance, and global asset flows.

Around the world, places like Singapore, Hong Kong, and others are experimenting with CBDCs while issuing licenses to compliant stablecoins, promoting coexistence and development.

In the future, we are likely to live in a dual-layer monetary system:

Digital cash provided by the state as a stable foundation, with market-created stablecoins bringing flexibility and innovation—they are not about replacing each other but about jointly shaping the next era of payments and finance.

Global CBDC Deployment Progress

CBDCs worldwide are undergoing a critical phase from pilot to scale-up. Although early attempts had limited effects, the new generation of digital currencies is gradually gaining scale, with designs and goals becoming more diverse.

• Bahamas · Sand Dollar (launched in 2020)

As the world’s first nationwide CBDC, the “Sand Dollar” aims to improve financial inclusion, especially on remote islands with weak banking services. It reduces transaction costs and maintains payment functions after natural disasters. However, user adoption has been low for a long time, with a small share in currency circulation, and privacy concerns exist due to its traceability design.

Similar situations are seen with Nigeria’s eNaira and Jamaica’s JAM-DEX, which also did not meet early expectations.

• China · Digital Renminbi

Since its pilot launch in 2020, the digital RMB has seen significant recent growth:

Payment scale jumped from 7.3 trillion yuan in July 2024 to 16.7 trillion yuan in November 2025, with wallet numbers soaring from 180 million to 2.25 billion.

The People’s Bank of China plans to implement a new digital RMB management system in January 2026, promoting its evolution from “digital cash” to “digital deposit currency.” Unlike the privacy-focused European approach, e-CNY emphasizes efficiency and promotion, and is exploring cross-border settlement through projects like mBridge.

• European Union · Digital Euro

Currently in the preparatory stage, intended as a supplement to cash and bank deposits, with earliest possible launch around 2029 (more likely early 2030). Its design emphasizes privacy protection and anti-counterfeiting, using separation of identity and payment data to achieve controllable anonymity, aiming to reduce reliance on foreign payment systems.

• United Kingdom · Digital Pound

The UK also prioritizes privacy, explicitly prohibiting government access to personal transaction data. Its individual holding limit may be set between 10,000-20,000 pounds, higher than the EU’s 3,000 euros, and will be open to both residents and non-residents.

• Kyrgyzstan · Digital Som

Adopting a pragmatic approach, Kyrgyzstan is exploring cooperation with existing crypto infrastructure (such as BNB Chain), using phased strategies:

1. Connect the central bank with commercial banks

2. Integrate treasury for government payments

3. Test offline payment functions

The country has also launched a national stablecoin KGST and plans to establish a cryptocurrency reserve to promote international use of CBDC.

Looking at various countries’ practices, most CBDCs focus on financial inclusion, payment efficiency, and monetary sovereignty, with many promising to protect user privacy. However, as scale expands, key issues remain unresolved: Can privacy protections be maintained in actual operation? Or will they be overshadowed by stronger state surveillance needs? Future CBDCs will seek a long-term balance among efficiency, privacy, and control.

Emerging Trends and Strategic Shifts

The development of global digital currencies is entering a more pragmatic phase. Countries’ strategies are no longer just “trying it out,” but are targeted and tailored to their needs.

• USA: Focus on stablecoins, delay digital dollar

The US has clarified its direction: prioritize regulation of stablecoins rather than rushing to launch a CBDC. The 2024 House of Representatives’ “Payment Stablecoin Clarity Act” establishes a federal regulatory framework for private stablecoin issuance. Meanwhile, the Federal Reserve remains cautious about retail digital dollars, stating it is “not urgent” and that it must be authorized by Congress. This means the US prefers market-led innovation, with the government focusing on setting rules.

• India, Brazil: Making digital currency “programmable” to solve real problems

Digital currencies are no longer just “electronic cash” but policy tools to improve efficiency.

India’s digital rupee pilot focuses on direct government subsidy distribution, ensuring funds reach beneficiaries without diversion.

Brazil’s Drex system plans to launch by the end of 2025, with built-in smart contract functions to automatically deduct taxes and execute contractual terms, turning CBDC into an automated efficiency tool.

• Japan: “Wholesale first,” upgrading the financial system internally

Unlike many countries that directly target the public, Japan’s central bank is choosing to first introduce a “wholesale CBDC” for interbank settlement, expected to be tested in 2026-2027, with retail versions for the general public temporarily on hold. This reflects a pragmatic approach: upgrade core financial infrastructure first, then consider public applications.

These examples show that the global digital currency landscape is moving toward differentiation and pragmatism—some countries strengthen regulation and private innovation, some leverage programmability for policy goals, and others start from internal financial system reforms. There will be no single path forward, only paths suited to each country’s circumstances.

Conclusion

The core question for future money is straightforward: how can the state’s digital currency and market’s stablecoins work well together?

The world has already begun action:

• Bank for International Settlements’ “Project Aurora”, testing interoperability between CBDCs and bank digital currencies within the same system.
• Singapore’s “Guardian Program”, which has achieved collaborative settlement among CBDC, stablecoins, and digital assets in real scenarios.

The goal of these efforts is simple: prevent future money from becoming isolated, disconnected islands. The key is that state-led digital currencies must be able to smoothly “talk” and operate together with widely used stablecoins.

Interestingly, as CBDCs develop, an unexpected effect may be emerging: it could make decentralized stablecoins more legitimate and stable, confirming their indispensable role in the future financial system.

The future monetary landscape is likely to be one of mutual roles and cooperation, rather than one replacing the other.