Retail CBDCs - Lessons for the digital euro
In which we look at the outcomes of pioneering CBDCs retail pilots across the world
EUCBDC
Stable Sis
6/4/20264 min read
As per my last post, the digital euro is coming. The EU wants to go ahead at full speed with a digital currency that covers both retail and wholesale use cases.
For the sake of understanding, retail is you and me buying groceries at the supermarket and getting a mortgage; wholesale is corporations and financial institutions moving money for their daily operations and long-term strategic goals. Given that these are two different markets, with different needs, I will treat them separately, starting now with retail.
The EU is not a first mover here. As of June 2026, there are five live digital currencies at different stages of development:
Bahamas, Sand Dollar: launched in October 2020 and run by the Central Bank of The Bahamas, with B$2.48 million (about €2.2 million) in circulation in 2025.
Nigeria, eNaira: launched in October 2021 and run by the Central Bank of Nigeria, with ₦18.31 billion (about €11.6 million) in circulation in early 2025.
Jamaica, JAM-DEX: launched in July 2022 and run by the Bank of Jamaica, with J$260 million (about €1.45 million) in circulation at the end of 2025.
China, e-CNY: in pilot since 2020 and run by the Peoeple's Bank of China (PBOC) through commercial banks, with ¥16.7 trillion (about €2.2 trillion) of cumulative transactions and 230 million personal wallets by November 2025.
India, e-rupee: retail pilot since December 2022 and run by the Reserve Bank of India (RBI), with more than 120 million transactions worth over ₹28,000 crore (about €2.53 billion).
The eagle-eyed among you will have realised that these figures are not very big. China’s e-CNY’s ¥16.7 trillion might seem large, but this is a cumulative figure in a country with ¥337.81 trillion of yearly non-bank payments. Most of these payments would be WeChat and Alipay, the e-CNY’s most direct competitors. So, across countries and including the world's second-largest economy, retail digital currencies have failed to take off.
The risk in this case is that euro countries will have to spend billions on something that does not get much use. Looking at the three driving forces behind low adoption could give some clues as to how the same fate can be avoided.
1. "Why switch?"
Both India and China have well-established digital payment systems, so any additional settlement method needs to find space among large and well established incumbents. Nigerians had mobile payments before many OECD countries. The EU’s payment infrastructure is efficient. Banks everywhere offer instant transfers. Mobile payments are a popular means of payment in all countries where they are present (like Bizum in Spain and MobilePay/Vipps in the Nordics). They are cheap, they are fast and they are convenient. So why should customers switch? This is true of both end users and merchants who would have to offer this option.
2. The chicken-and-egg problem
This follows directly from the point above. For a payment system to work it needs a customer willing to use and a merchant willing to accept it. The problem is that both sides need to be willing to make the additional effort at the same time. Otherwise, the end result is merchants not offering a specific kind of payment because nobody asks for it, and customers not buying into it because no merchant gives them the option to. In the Bahamas, as of 2023, only 455 merchant wallets were active, out of a total of 1,512 issued ones. As of the end of 2024, there were 2,034 issued wallets and an unknown number of active ones. Consumer wallets as of end 2024 were 133,481, which puts 66 customer wallets for each merchant wallet, assuming they are all active. Both numbers and their ratio are too low to justify the overhead of using an additional payment method. In Jamaica, bankers offered a similar complaint.
3. Privacy and trust
I covered the point on privacy in my previous post. There is a subtler one on trust and how much you trust your government. According to the Wellcome 2020 survey, only 23.1% of Nigerians would say they have a lot or some trust in their government. It can therefore be expected they would feel uncomfortable with a mechanism that would make it much easier for their governments to get their money. Trust in the government in EU countries is mixed. Predictably, the Nordic countries have the highest trust in their government. However, with the exception of Finland, the question of a digital euro for retail purposes is largely irrelevant for them. Moving southwards, in Spain, Portugal, Croatia and Slovenia, less than half of the population would say they have a lot or even some trust in their government. Italy manages to get over the 50% mark at 52%, France and even Belgium do only marginally better at 56% and 55%. Resistance can therefore be expected in a sizeable chunk of the euro area.
Is this all hopeless?
I understand why in this day and age the ECB insists on the digital euro. The EU's relationship with the US is unstable and it is indeed the US that currently provides an uncomfortable amount of our payment infrastructure (e.g. Visa and Mastercard). Furthermore, with the growing threat of cyber-attacks that can bring down payment systems and electricity grids, we will be grateful for a payment system with offline capabilities, like the Bahamian Sand Dollar and Jamaica's JAM-DEX.
The average person, however, does not go grocery shopping with these concerns in mind.
There is the obvious possibility of enticing both merchants and consumers to the digital euro by providing deposits that bear an interest that is higher than the one offered by commercial banks.
This would probably upset said commercial banks and add one more item to pay for in the ever-growing government budgets, with the added twist of rising interest rates[1].
A much wiser course would be to prioritise wholesale use cases where the “Why Switch?” question has a much better answer.
I'll discuss what that answer is in my next post.
Until next time,
Stable Sis
[1] It is true that rising interest rates is mainly a US problem, but these things have a way of spreading.