America is betting on stablecoins while other nations favor safer digital currencies.
This article appears in the September 2026 issue of Global Finance Magazine.
CFOs and corporate treasurers face a dilemma when selecting which digital currencies to use. Central bank digital currencies (CBDCs) are backed by the issuing central bank’s balance sheet and the full faith and credit of the bank’s national government. At the same time, fiat-currency-denominated stablecoins are issued by private entities and are backed by a regulated basket of highly liquid assets.
Typically, CBDCs would be the least risky digital currency, but what happens when the world’s largest economy decides to back stablecoins over CBDCs?
The U.S. government is not following the wisdom of the crowd here. It is one of a handful of nations out of step with the estimated 117 countries and currency unions that have researched, developed, or deployed CBDCs, according to data from the Atlantic Council.
“I would say at the official level, they’re not showing too much enthusiasm,” said Pierre Siklos, professor of economics at Wilfrid Laurier University in Canada. “But in a less visible way, I think the Federal Reserve, in particular, has people who think about and study these things.”
The Trump administration and its allies in Congress have a different view. This session, the House of Representatives passed the Anti-CBDC Surveillance State Act, which is nearly identical to a similarly named bill it passed during its previous seating. Both would prevent the Fed from researching, developing, or issuing a CBDC to individuals, directly or indirectly.
By contrast, the world’s second- and third-largest economies by nominal GDP, the EU and China, are advancing their CBDC strategies significantly. After gaining key backing in the European Parliament in June, the European Central Bank (ECB) is closer to making the digital euro a reality. The ECB expects to issue its first digital euro in 2029, following a 12-month pilot slated to start in the second half of next year.
The e-yuan, backed by the People’s Bank of China (PBOC) and issued by financial institutions, is ahead of the curve, having been used in about 3.4 billion transactions worth about $2.3 trillion in 2025, since its multiyear pilot launched in 2023. By way of comparison, the three largest credit card processors—Visa, UnionPay, and Mastercard—processed an estimated 864 billion credit card transactions in 2025 alone. But stablecoins far surpassed them, handling an estimated $9 trillion in transactions from October 2024 to October 2025, according to the authors of the State of Crypto 2025 report, published by venture capitalist firm Andreessen Horowitz’s a16z crypto fund.
Will the U.S. Fall Behind?
In theory, not adopting a CBDC could chip away at the U.S. dollar’s status as the global reserve currency and the preferred medium for cross-border transactions as non-dollar-denominated CBDCs gain momentum, industry watchers say.
CIGI
“If there are more bilateral settlements that are occurring in domestic currencies compared to the portion of settlements taking place using the U.S. dollar,” said Odun Olowookere, research director of digital economy at the Center for International Governance and Innovation (CIGI), “then the U.S. would probably need to be worried. But for now, I do not think it has been affected much.”
According to the authors of the 2026 Global Public Investors report, published by the Official Monetary and Financial Institutions Forum (OMFIF), the dollar is not under threat. However, it is losing some of its luster: “While the dollar still dominates portfolios and is expected to do so for the foreseeable future, geopolitical risk has pushed reserve managers over the threshold, as central banks now indicate a gradual movement towards de-dollarization.”
However, by providing a regulatory framework that encourages the development of privately issued, dollar-denominated stablecoins through the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, the U.S. is creating a new vector for dollarization and a way to export U.S. monetary policy to other jurisdictions, said Olowookere.
“It also grants cheap, easy access to U.S. markets and leverages the network effect already built into the U.S. dollar through privately issued payment instruments,” he added.
An additional benefit for the U.S. is that not having a Fed-backed CBDC may hamper the adoption of multi-CBDC platforms for cross-border settlement, such as the Bank for International Settlements’ (BIS) Project Agorá—a pilot project to tokenize central bank reserves and commercial bank deposits on a shared platform—and the PBOC-led Multiple Central Bank Digital Currency Bridge (mBridge) initiative.
“When Project Agorá was just embryonic, there was a certain reluctance from other participating central banks to put ‘real central bank money’ into the platform” when the Fed was not providing an equivalent, said Lewis McLellan, head of content with OMFIF’s Digital Money Institute. “The Agorá trials indicate that the Fed has provided tokenized reserves for the transactions performed in the trials, but it is possible that transitioning to transactions outside of a research environment may prompt further scrutiny. It would be fairly radical for even regulated stablecoins to play the role of central bank money. You would probably expect all of the participating central banks to provide a similar form of money.”
What Benefit?
Many have described CBDCs as a solution in search of a problem.
“I’m still trying to wrap my head around what the actual benefits are for central banks to issue digital currencies besides addressing a lot of the hype that has been around for the last several years,” said Siklos.
From a structural perspective, central banks back their CBDCs with their full faith and credit, which raises a host of issues compared to stablecoins backed by a privately maintained reserve or bank deposits.
“Having a direct claim on the central bank might feel safer,” said Sebastian Mallaby, a senior fellow for international economics at the Council on Foreign Relations, “but you don’t want to disintermediate the private banking system, which provides significant value through product innovation. Central banks are monopoly providers and are not going to be the most innovative and imaginative in terms of financial products.”
If central banks choose to focus on the retail market with their CBDCs, they are entering direct competition with the private banking system, which would require them to deal with individual depositors at the retail level, Siklos said.
“I think central banks are extremely wary of the implications because, in many cases, they supervise the banking system, or certainly watch over it,” he added. “They do not want to mix [oversight and participation] if they can avoid it. On the technical side, central banks are not well-suited to handle them. That is something the private sector is better suited to.”
Central banks would also be reinventing the wheel for a market that is already well-served.
“Banks already offer people effective digital currencies,” said Mallaby. “You can have your money in a bank account, and you can then move it around electronically. The only difference is that the CBDC is not a claim on the bank; it’s on the central bank. And I don’t really think that’s a great idea, actually.”
Added Siklos, “Even in China, alternatives like AliPay and WeChat payments are crowding out any attempt by the authorities to have a digital currency.”
Such competition led the Bank of Canada to announce in September 2024 that after completing multi-year research into a digital Canadian dollar, it would pivot its focus and resources to developing its real-time clearing and settlement platform for payments, dubbed the Real-Time Rail, which is set to go live next quarter.
However, the central bank did not discount developing a CBDC in the future. “The body of knowledge built over recent years will be invaluable if, at some point in the future, Canadians, through their elected representatives, decide they want or need a digital Canadian dollar,” it posted on its website.
The competition between CBDCs and instant payment systems will likely intensify as platforms like Nexus Global Payments vie to connect domestic instant payment systems worldwide. Initially developed by the BIS, Nexus already operates in India, Indonesia, Malaysia, the Philippines, Singapore, and Thailand.
“There are about 80 instant payment systems in operation worldwide,” said OMFIF’s McLellan. “If all of them joined the Nexus hub, you would radically improve cross-border retail payment access.”
Enter Geopolitics
If CBDCs compete with the private banking system but are less preferred than instant payment systems, why would central banks and their national governments be interested in backing them? The answer is sovereignty.
The world has learned the risks of exposure to the U.S. and U.S.-dominated financial infrastructure. A month into his second administration, President Donald Trump began using access to the U.S. banking system, including credit card transactions, as a foreign policy cudgel against perceived political foes, such as 11 judges and prosecutors of the International Criminal Court.
“Europe is moving toward payment sovereignty by developing both private interoperable payment solutions and the digital euro,” said Fernando Navarrete, a member of the European Parliament who oversees digital currency legislation, in a Reuters report. “The real challenge is to make the development of both options compatible and efficient without imposing additional costs on citizens.”
In July, the ECB selected 36 payment service providers across the eurozone to participate in a pilot program testing the proposed digital euro’s technical functionality and operational processes while refining the user experience.
“The strong market interest in the pilot shows the private sector’s readiness to engage actively and quickly advance with the digital euro project to strengthen the European payments landscape,” said ECB Executive Board member Piero Cipollone in a prepared statement. “We look forward to deeper engagement as we work with and learn alongside European payment service providers in developing a secure, efficient, and inclusive digital euro.”
Another CBDC initiative that avoids the dollar is mBridge, which was developed by the BIS and the central banks of China, Hong Kong, Saudi Arabia, Thailand, and the United Arab Emirates.
“It’s a PBOC-led project, which can look like Project Agorá as an attempt to bring a lot of Western economies onto a wholesale, CBDC-enabled, cross-border payment system,” said McLellan. “mBridge is doing the same for countries in China’s orbit.”
With central bank-issued CBDCs, privately issued stablecoins, and bank-issued tokenized deposits all competing for users, the CIGI’s Olowookere said, the world has a front-row seat for a test of Gresham’s law: that bad money drives out good. One of the digital currencies will have more intrinsic value than the others.
“The one with the least intrinsic value gets regulated to a payment instrument,” he said, “while the ones with higher intrinsic value get used as stores of value. Eventually, ones with the greatest values are no longer in circulation because everyone has hoarded them, because they are too valuable to spend.”
That suggests corporate treasurers should be ready to include all three types of digital currencies on their balance sheets until the global economy decides which financial role is best for each.
Rob Daly covers fintech and the economy. Contact him at rdaly@gfmag.com.
