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

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Original Author: Bai QinJen, Evan Lee

Introduction

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

— Perhaps, the answer is not a binary choice.

As countries accelerate the rollout of “Central Bank Digital Currencies” (CBDCs), another form of market-created but legally recognized “stablecoins” has quietly entered the global financial system. They are not rivals but more like a pair of partners constantly adjusting 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 CBDC

Although often discussed together, stablecoins and CBDCs have entirely different origins and missions.

Stablecoins Created by the Market

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

CBDCs 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:

CBDC mainly for domestic: more suitable for everyday payments and policy regulation within the country

Stablecoins mainly for offshore: perform better in cross-border payments, crypto finance, and global asset flows.

Around the world, places like Singapore and Hong Kong are experimenting with CBDCs while issuing licenses to compliant stablecoins, promoting their 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, and market-created stablecoins bringing flexibility and innovation—they are not replacing each other but jointly shaping the next era of payments and finance.

Global CBDC Deployment Progress

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

Bahamas · Sand Dollar (launched in 2020)

As the world’s first national 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, whose early promotion did not meet expectations.

China · Digital Renminbi

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

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

The People’s Bank of China will 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, exploring cross-border settlement through projects like mBridge.

European Union · Digital Euro

Currently in the preparatory stage, planned 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 dependence on foreign payment systems.

United Kingdom · Digital Pound

The UK also prioritizes privacy, explicitly prohibiting government access to personal transaction data. The personal holding limit may be set between 10,000 and 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, exploring cooperation with existing crypto infrastructure (such as BNB Chain), with phased implementation:

1. Connect 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 practices worldwide, most CBDCs focus on financial inclusion, payment efficiency, and monetary sovereignty, with many promising to protect user privacy. However, as scale increases, 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 regulation.

Emerging Trends and Strategic Shifts

The development of global digital currencies is entering a more pragmatic stage. Countries are no longer just “trying it out” but are advancing based on their specific needs.

United States: Focus on Stablecoins, Delay Digital Dollar

The US has clarified its direction: prioritize regulation of stablecoins rather than rushing to launch a CBDC. The “Payment Stablecoin Clarity Act” passed by the House in 2024 established a federal regulatory framework for private-sector stablecoins. Meanwhile, the Federal Reserve remains cautious about retail digital dollars, stating it is “not urgent” and that their implementation requires Congressional approval. This means the US prefers to let market forces lead innovation in digital currency while the government focuses on setting rules.

India and Brazil: Making Digital Currency “Programmable” to Solve Practical Problems

Digital currency is no longer just “electronic cash” but a policy tool to improve efficiency.

India’s digital rupee pilot focuses on distributing government subsidies directly to beneficiaries, ensuring funds are not misused.

Brazil’s Drex system, planned for launch by late 2025, will include smart contract features 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 first launching a “wholesale CBDC” for interbank settlement, expected to be tested in 2026-2027, while retail versions for the general public are temporarily on hold. This reflects a pragmatic approach: first upgrade the core financial infrastructure before considering public applications.

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

Conclusion

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

The world has already begun action:

The Bank for International Settlements’ “Project Aurora” is testing how CBDCs and bank digital currencies can interoperate within the same system.

Singapore’s “Guardian Program” has achieved collaborative settlement among CBDC, stablecoins, and digital assets in real scenarios.

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

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

The future monetary landscape is likely not about one replacing another but about different roles and collaborative efforts.