Commercial Bank Money Token (CBMT)

What Is a Commercial Bank Money Token?

A commercial bank money token (CBMT) is a digital representation of a commercial bank deposit recorded on a distributed ledger. Unlike a stablecoin, which is typically issued by a non-bank entity and backed by reserve assets like Treasury bills or cash equivalents, a CBMT is a direct liability of the issuing bank. Holding a CBMT is legally equivalent to holding a deposit at that bank: the same deposit insurance, the same regulatory oversight, and the same legal claim on the institution's balance sheet.

The concept was introduced by the German Banking Industry Committee (Deutsche Kreditwirtschaft) in a 2021 whitepaper, with subsequent working papers refining the design through 2023. The official CBMT initiative describes the tokens as "not a cryptocurrency, not a stablecoin, not a CBDC": they are commercial bank money in a new form factor, designed to bring programmability and instant settlement to the existing banking system without creating a new category of regulated asset.

This distinction matters because it determines which regulatory framework applies. In December 2025, Germany's financial supervisor BaFin classified CBMTs as deposits rather than e-money tokens, exempting them from the EU's MiCA regulation and placing them under existing banking law instead.

How It Works

When a bank issues a CBMT, it creates a token on a distributed ledger that represents a deposit obligation. The process mirrors how banks already create money through lending and deposit creation, but adds a blockchain-native representation that can interact with smart contracts and settle in real time.

1. A customer deposits funds at a participating bank, or the bank converts an existing deposit into tokenized form
2. The bank mints a CBMT on the ledger, representing that deposit liability at a 1:1 ratio
3. The token can be transferred, used in programmable payment flows, or settled against tokenized assets on-chain
4. At any time, the holder can redeem the CBMT for a conventional bank deposit or fiat withdrawal

Interbank Settlement

A key challenge for CBMTs is interbank settlement: when a CBMT moves from a customer of Bank A to a customer of Bank B, the underlying deposit obligation must also transfer between banks. The CBMT architecture addresses this through a bridge layer (built by technical service provider UDPN in the German initiative) that connects each bank's tokenized core banking system to the shared ledger network. Each bank issues its own deposit tokens; there is no single shared ledger controlled by one institution.

Interbank settlement can occur through traditional real-time gross settlement systems, through central bank money on a wholesale CBDC, or through bilateral netting arrangements between participating banks. The design is deliberately agnostic to the settlement mechanism.

Technology Architecture

The GBIC working paper specifies that CBMTs should be technology-agnostic, meaning they are not tied to a single blockchain platform. In practice, sandbox implementations have used permissioned networks such as Hyperledger Besu, with bridge capabilities to connect to additional industry DLT networks. Test currencies in the sandbox have included EUR, USD, and JPY.

The architecture involves three layers of technical service providers:

• UDPN (Universal Digital Payments Network) handles messaging and interoperability between banks
• GFT Technologies provides system integration with existing bank infrastructure
• Giesecke+Devrient (G+D) manages onboarding, security, and currency technology

The Hierarchy of Money

Understanding where CBMTs fit requires understanding the hierarchy of money: a framework from monetary theory that ranks money by the creditworthiness and authority of its issuer.

Commercial bank money already constitutes the vast majority of money in circulation in modern economies. When you hold a balance in a bank account, you hold commercial bank money: a claim on the bank, not on the central bank. CBMTs simply put this existing form of money onto blockchain rails, inheriting the trust and regulatory protections of the banking system while gaining the programmability of tokenized money.

For a deeper comparison of how these digital money forms compete and complement each other, see the research article on CBDCs vs. stablecoins and the analysis of tokenized deposits vs. stablecoins.

CBMT vs. Stablecoins

The distinction between CBMTs and stablecoins is not just technical: it is regulatory and structural. While both represent digital claims denominated in fiat currency, they differ in fundamental ways:

Stablecoins like USDC and USDT operate outside the banking system. Their value depends on the issuer maintaining sufficient reserves and honoring redemptions. CBMTs, by contrast, are embedded in the banking system: they carry the same protections and the same risks as any other bank deposit.

The U.S. GENIUS Act explicitly excludes bank deposits recorded using distributed ledger technology from its definition of "payment stablecoin," drawing a deliberate legal boundary between the two categories. For more on the regulatory landscape for bank-issued tokens, see the research on bank-issued stablecoins after the GENIUS Act.

Use Cases

Cross-Bank B2B Payments

In May 2026, the CBMT sandbox executed its first live multibank transactions: Siemens and Evonik transacted via DZ Bank and Commerzbank without relying on correspondent banking infrastructure. The tokens settled directly between the banks' DLT nodes, eliminating intermediary steps and reducing settlement time.

Delivery versus Payment Settlement

CBMTs enable true delivery versus payment for tokenized securities. When both the asset and the cash leg are on-chain, a smart contract can ensure that the security transfer and the payment occur atomically: either both complete or neither does. This eliminates settlement risk in securities transactions.

Programmable Enterprise Payments

The CBMT sandbox explores several programmable payment patterns:

• IoT-triggered payments: machines initiate invoice-free payment flows based on sensor data or usage metrics
• ERP integration: enterprise resource planning systems connect via API for automated treasury management
• AI agent-initiated payments: autonomous agents execute cross-bank payments with human authorization gates

Multi-Currency Settlement

Because CBMTs can represent deposits in any currency the issuing bank supports, they enable on-chain foreign exchange settlement. The sandbox has tested EUR, USD, and JPY denominated tokens, with DZ Bank describing the vision as a "tokenized extension of SEPA" capable of handling all currencies.

The CBMT Initiative: Key Milestones

The CBMT initiative, led by the German Banking Industry Committee in partnership with the Federation of German Industries (BDI), has progressed through several phases:

Corporate participants in the sandbox include BASF, Bosch, Infineon, Mercedes-Benz, Siemens, and Evonik, reflecting the initiative's focus on industrial and enterprise payment use cases rather than retail banking.

Risks and Considerations

Bank Credit Risk

Unlike central bank money, CBMTs carry the credit risk of the issuing commercial bank. If the bank fails, CBMT holders are treated as depositors in insolvency proceedings. Deposit insurance mitigates this risk up to applicable limits (e.g., EUR 100,000 under the EU Deposit Guarantee Schemes Directive), but amounts above the threshold are exposed to loss.

Regulatory Fragmentation

While BaFin classified CBMTs as deposits in Germany, other national supervisors in the EU have not yet issued equivalent determinations. For the CBMT network to expand across Europe, each participating bank needs approval from its own national financial authority. This creates uncertainty for cross-border adoption and could result in inconsistent regulatory treatment across jurisdictions.

Interoperability Challenges

Each bank issues its own CBMT on its own infrastructure. While the bridge layer provides interoperability between participating banks, connecting to the broader tokenized money ecosystem (stablecoins, CBDCs, tokenized securities on public chains) remains an open challenge. The CBMT architecture must coexist with other payment rails and settlement systems.

Fractional Reserve Implications

Because CBMTs are bank deposits, they operate under fractional reserve banking. The issuing bank does not hold 1:1 reserves against every CBMT: it extends credit and manages risk through its balance sheet, just as with any other deposit. This contrasts with fully reserved fiat-backed stablecoins and may create different risk dynamics during periods of financial stress.

Adoption Timeline

Despite the progress of the sandbox, production adoption remains early-stage. DZ Bank has estimated that meaningful market adoption could take six months to two years from the first live transactions. The initiative targets five banks at production launch, a small fraction of the European banking system.

This glossary entry is for informational purposes only and does not constitute financial or investment advice. Always do your own research before using any protocol or technology.