Stablecoins and Wholesale CBDCs: How Private and Public Digital Money Will Coexist

Central banks and stablecoin issuers are building parallel digital money systems. The stablecoin market now exceeds $300 billion, while wholesale CBDC projects from the BIS, ECB, and multiple Asian central banks are reaching prototype and production stages. These are not competing visions so much as emerging layers of the same monetary stack: private digital money for retail payments and commerce, public digital money for interbank settlement and final clearing.

Understanding how these layers will interact matters for anyone building on stablecoin infrastructure. The architecture decisions being made now by central banks, regulators, and protocol designers will define the settlement rails that stablecoins ultimately depend on.

Why Wholesale CBDCs Have More Traction Than Retail

The distinction between wholesale and retail CBDCs is fundamental. Wholesale CBDCs are restricted to banks and financial institutions for interbank settlement: think of them as tokenized central bank reserves. Retail CBDCs are consumer-facing digital cash issued directly by the central bank, intended to replace or supplement physical currency.

Wholesale CBDCs have gained significantly more traction for practical and political reasons. As of 2025, roughly 39% of surveyed central banks were piloting wholesale CBDCs for interbank settlement, and multiple projects have demonstrated real transactions. Retail CBDCs, by contrast, have struggled almost everywhere they have been tried.

Retail CBDC Setbacks

Nigeria launched the eNaira in October 2021, making it one of the first countries outside China with a live retail CBDC. Adoption was minimal: by 2025, transactions were concentrated in government cash transfers rather than organic commerce, and a Central Bank of Nigeria official acknowledged it was “not a rosy story.” The Eastern Caribbean’s DCash was shut down in January 2024 due to persistent technical failures. Australia’s Reserve Bank concluded in 2024 that there was “no clear public interest case” for a retail CBDC and pivoted entirely to wholesale experiments (Project Acacia).

The pattern is consistent: retail CBDCs face an adoption problem. Citizens already have bank accounts, mobile payments, and increasingly stablecoins. A central-bank-issued retail token struggles to offer a compelling reason to switch, while raising concerns about financial surveillance and bank disintermediation.

The timing problem: By the time major economies could ship a retail CBDC, regulated stablecoins like USDC were already processing material payment volumes. Private money moved faster than public institutions.

Why Wholesale Works

Wholesale CBDCs solve a different, more acute problem: correspondent banking is slow, expensive, and involves cascading credit risk through intermediary chains. A cross-border payment from Bangkok to Dubai can pass through three or four banks, each adding fees and settlement delays. Wholesale CBDCs compress this into atomic settlement: both legs of a cross-currency transaction complete simultaneously or not at all.

Critically, wholesale CBDCs work within the existing two-tier banking system rather than disrupting it. Commercial banks retain their role as intermediaries; the central bank simply provides a more efficient settlement rail. This makes wholesale CBDCs politically palatable in a way retail CBDCs are not.

Active Wholesale CBDC Projects

Several major projects are now operational or nearing production. They reveal two diverging approaches: one anchored around China, the other around the G7.

BIS mBridge

mBridge is a multi-CBDC platform for real-time cross-border payments, built on a custom blockchain derived from Ethereum technology. The participating central banks are the People’s Bank of China, Hong Kong Monetary Authority, Bank of Thailand, Central Bank of the UAE, and the Saudi Central Bank (which joined as a full participant in June 2024). Over 30 additional central banks are observers.

The project reached MVP stage in June 2024, but the BIS itself withdrew from the project on October 31, 2024, officially citing “graduation” from the Innovation Hub. The exit was widely interpreted as driven by US and Western concerns that mBridge could enable sanctions evasion: Russian President Putin publicly promoted the underlying technology at the October 2024 BRICS summit as a tool to bypass dollar-based sanctions architecture.

Despite the BIS exit, the participating central banks continued development independently. Cumulative transaction volume has surged to approximately $55 billion, with the e-CNY accounting for over 95% of settlement activity. The PBoC has incorporated mBridge expansion into its five-year plan, naming Singapore, Thailand, UAE, and Saudi Arabia as priority corridors.

BIS Project Agora

Project Agora represents the G7-aligned response. Convened by the BIS Innovation Hub and the Institute of International Finance, it is the largest BIS Innovation Hub project to date. Seven central banks participate: the Banque de France (representing the Eurosystem), Bank of Japan, Bank of Korea, Bank of Mexico, Swiss National Bank, Bank of England, and the Federal Reserve Bank of New York (through the New York Innovation Center). The Bank of Canada joined in May 2026. Over 40 private financial institutions including JPMorgan, HSBC, Deutsche Bank, Citi, UBS, Swift, and Mastercard are also involved.

In May 2026, the BIS published its prototype report demonstrating that tokenized commercial bank deposits can settle against tokenized central bank reserves on a shared platform, enabling atomic multi-currency settlement of wholesale cross-border payments with potential for 24/7 operation. Each central bank maintains sovereign control over its own partition: central bank money never leaves domestic jurisdiction, and only settlement instructions cross borders.

ECB: Pontes and Appia

The European Central Bank is pursuing a dual-track strategy. Project Pontes, scheduled for go-live on September 21, 2026, bridges DLT-based capital market platforms with the ECB’s existing TARGET Services, enabling tokenized financial asset settlement in central bank money. Initial operating hours will be limited, expanding to 24/7 by 2028.

Project Appia is the longer-term vision: a “European Shared Ledger” integrating wholesale CBDC, tokenized commercial bank money, and tokenized financial instruments on a single platform. The Banque de France’s DL3S, a proprietary DLT platform used for 12 successful wholesale CBDC experiments, feeds into both initiatives.

ECB Executive Board member Isabel Schnabel argued at Jackson Hole in August 2026 that central bank money must “go onchain to survive”: a striking acknowledgment from the institution responsible for the euro.

Singapore Project Ubin+

The Monetary Authority of Singapore has taken a standards-first approach. Project Ubin+ builds on the original Project Ubin (2016 to 2020), which led to the commercialization of Partior, a JP Morgan/DBS/Temasek joint venture for interbank settlement. The Cedar x Ubin+ study with the New York Federal Reserve explored multi-currency cross-border settlement using DLT, including less commonly traded currency pairs.

In November 2025, MAS Deputy Managing Director Leong Sing Chiong stated that MAS was “considering a hybrid approach” combining wholesale CBDC access for financial institutions with interoperability between DLT and non-DLT payment infrastructures. Singapore is positioning itself as a neutral hub for wholesale CBDC standards rather than pursuing a retail CBDC.

Comparing Wholesale CBDC Projects

Geopolitical fragmentation: The mBridge/Agora split reveals two blocs building incompatible wholesale CBDC systems with no overlapping central bank membership. Some analysts have declared multilateral CBDC interoperability effectively dead, replaced by bloc-based settlement networks aligned to competing geopolitical interests.

The Three-Layer Digital Money Architecture

A consensus is forming around how public and private digital money will coexist. Rather than wholesale CBDCs replacing stablecoins or vice versa, each occupies a distinct layer of the monetary stack. BIS General Manager Agustín Carstens has championed a “unified programmable ledger” concept since 2023, describing a shared platform where tokenized central bank reserves, tokenized commercial bank deposits, and tokenized assets coexist in separate partitions.

In practice, the architecture is emerging in three layers with distinct properties and use cases:

This mirrors the existing monetary system. Today, central bank reserves (Layer 1) underpin commercial bank deposits (Layer 2), which underpin retail payment instruments like debit cards and ACH transfers (Layer 3). Tokenization does not invent a new hierarchy; it digitizes the one that already exists.

How Settlement Flows Between Layers

The critical question is how stablecoins at the retail layer connect to wholesale CBDCs at the settlement layer. The emerging model works through the existing banking chain:

1. A user holds stablecoins (Layer 3). These represent a claim on the issuer.
2. The stablecoin issuer holds reserves at a regulated bank: cash, demand deposits, and short-term US Treasuries (as required by the GENIUS Act).
3. The bank settles with other banks via wholesale CBDC or central bank reserves (Layer 1).
4. Redemption flows in reverse: stablecoin to issuer, issuer to bank, bank to central bank reserves.

This means stablecoins do not bypass the central banking system. They sit on top of it, connected through reserve requirements and banking relationships. The transition to tokenized settlement changes the speed and programmability of these connections, not the trust hierarchy.

Regulation as the Bridge

Two pieces of legislation are creating the formal link between stablecoins and the sovereign monetary system.

The GENIUS Act (United States)

Signed into law on July 18, 2025, the GENIUS Act is the first federal crypto legislation in the US. It requires permitted payment stablecoins to maintain 1:1 reserve backing in cash, demand deposits at insured depositories, short-term US Treasuries, Treasury-backed repos, and qualifying money market funds. Issuers must provide monthly attestations certified by their CEO and CFO. Holders have the right to redeem 1:1 for US dollars at any time.

The Act effectively anchors stablecoins to central bank money by mandating that reserves consist exclusively of sovereign-backed instruments. This closes the gap between “private digital money” and the central bank settlement layer, since a GENIUS Act-compliant stablecoin’s reserves are ultimately claims on US government debt or Federal Reserve balances.

MiCAR (European Union)

The EU’s Markets in Crypto-Assets Regulation took full effect in June 2024. It requires e-money token issuers to hold reserves at credit institutions and maintain redemption rights. MiCAR goes further than GENIUS in some respects: it caps transaction volumes for non-euro stablecoins and imposes interoperability requirements that align with the ECB’s digital money strategy.

Together, the GENIUS Act and MiCAR create a regulated corridor where stablecoins function as the retail interface to a settlement system increasingly built on wholesale CBDCs. For a deeper comparison of these regulatory frameworks, see our CBDC vs stablecoins global comparison.

The Political Dynamics

The coexistence of stablecoins and wholesale CBDCs is not purely a technical question. It sits at the intersection of monetary sovereignty, financial surveillance, and dollar dominance.

Central Banks Want Control

Central banks view wholesale CBDCs as a way to maintain the relevance of central bank money in a tokenized world. The ECB’s Schnabel made this explicit at Jackson Hole: if central bank money does not go onchain, tokenized private money could erode the monetary anchor that gives the financial system stability. The fear is not that stablecoins will fail, but that they will succeed too well, creating a parallel monetary system with no public-sector backstop.

This explains the urgency behind projects like Pontes and Agora. Central banks are racing to provide the settlement infrastructure that tokenized finance needs before the private sector builds alternatives that circumvent them entirely.

Stablecoin Issuers Want Market Access

Stablecoin issuers need access to banking services and central bank settlement to maintain their pegs. The reserve model only works if issuers can reliably convert between stablecoins and fiat currency. The GENIUS Act opens a path for nonbank stablecoin issuers to gain Federal Reserve approval, but access comes with oversight: monthly reporting, reserve composition restrictions, and redemption obligations.

The bargain is straightforward: stablecoin issuers accept regulation in exchange for legitimacy and banking access, while central banks accept private money creation in exchange for maintaining the settlement layer as the anchor of trust. Neither side gets everything it wants, but both get a workable system.

The De-Dollarization Wildcard

mBridge complicates this dynamic. Its explicit design enables cross-border settlement without routing through the dollar, directly challenging the infrastructure that supports US sanctions enforcement. The BIS’s withdrawal and the subsequent China-led development reveal how wholesale CBDC architecture is entangled with de-dollarization strategies. Dollar-denominated stablecoins, by contrast, extend dollar reach: every USDT and USDC in circulation represents offshore dollar demand that reinforces the dollar’s global role.

The paradox: Dollar stablecoins strengthen dollar dominance while non-dollar wholesale CBDCs seek to reduce it. This means the US has an interest in promoting regulated stablecoins as soft power, even as it resists multilateral CBDC platforms it cannot control.

Interoperability Challenges

The hardest unsolved problem is making these layers talk to each other. Today, a USDC token on Ethereum is not inherently interoperable with USDC on Solana, let alone with a tokenized euro deposit on the ECB’s Pontes or a wholesale CBDC on Agora.

The BIS Unified Ledger Vision

The BIS’s solution is the unified ledger: a shared platform where all forms of tokenized money coexist. The “Finternet” paper co-authored by Carstens and Nandan Nilekani (architect of India’s Aadhaar digital identity system) describes an architecture built on interoperability, verifiability, programmability, and finality. Project Agora is the first practical implementation: its prototype placed tokenized commercial bank deposits and tokenized central bank reserves on a shared platform with atomic settlement.

The unified ledger approach resolves fragmentation by co-locating assets rather than bridging separate chains. If wholesale CBDCs, tokenized deposits, and stablecoins all exist on a common programmable infrastructure, composability becomes native rather than requiring cross-chain bridges with their associated security risks.

The Competing Approach: Bridge Networks

In practice, a single unified ledger spanning multiple jurisdictions and asset types may never fully materialize. The alternative is a network of interoperable but independent ledgers connected by standardized messaging and settlement protocols. ISO 20022 is being adopted as the common messaging standard for both traditional and tokenized payment systems, and projects like Ubin+ focus on developing interoperability standards rather than a single shared platform.

Both approaches face the same core requirement: delivery versus payment across different forms of tokenized money. If a stablecoin payment needs to settle against a wholesale CBDC for finality, the exchange must be atomic: either both legs complete or neither does. This is technically achievable with smart contracts and hash-locked mechanisms, but the governance and legal frameworks for cross-system atomic settlement are still being designed.

What This Means for Stablecoin Infrastructure

For builders in the stablecoin ecosystem, the wholesale CBDC trajectory shapes several concrete decisions.

• Reserve management becomes more transparent and regulated. The GENIUS Act’s monthly attestation requirements and MiCAR’s reserve rules create a compliance baseline that stablecoin issuers must meet to operate.
• Settlement finality may eventually flow through wholesale CBDC rails. Stablecoin issuers whose banks participate in Agora or Pontes could offer faster, more verifiable redemption backed by tokenized central bank reserves.
• Cross-chain fragmentation remains the near-term problem. While central banks design unified ledgers, the stablecoin ecosystem needs practical interoperability now: CCTP, bridge aggregators, and multi-chain settlement layers.
• Jurisdictional alignment matters. Stablecoins operating in euro markets will need to integrate with the ECB’s tokenized settlement infrastructure. Dollar stablecoins will interact with whatever wholesale CBDC architecture the Fed ultimately endorses through Agora.

Protocols that support stablecoins on programmable settlement layers are well-positioned for this transition. Spark, for instance, supports USDB and other stablecoins on its Bitcoin Layer 2 infrastructure, enabling dollar-denominated payments with instant, self-custodial settlement. As the boundary between private stablecoins and public wholesale CBDC settlement crystallizes, infrastructure that can bridge both worlds becomes increasingly valuable.

For developers exploring how stablecoin settlement works in practice, the Spark documentation covers token issuance and transfer mechanics. Users looking to experience stablecoin payments on Spark can try wallets like General Bread, which provides a Spark-powered interface for dollar-denominated Bitcoin payments. For broader analysis of how stablecoins compare to other forms of digital money, see our tokenized deposits vs stablecoins and CBDC vs stablecoins global comparison articles.

Looking Ahead

The next 18 months will be decisive. The ECB’s Pontes launches in September 2026. Project Agora moves to real-value testing. The GENIUS Act’s implementing regulations take full effect by early 2027. mBridge continues expanding under Chinese leadership. Each milestone solidifies the three-layer architecture: wholesale CBDCs as the settlement foundation, tokenized deposits as the banking layer, and stablecoins as the retail and DeFi interface.

The question is no longer whether public and private digital money will coexist. It is whether the interoperability mechanisms being designed now will create a coherent global system, or whether geopolitical fragmentation will produce competing blocs with incompatible settlement infrastructure. For stablecoin users and builders, the practical implication is the same: the payment rails underneath your stablecoin are about to change, and understanding the wholesale CBDC layer is essential to navigating what comes next.

This article is for educational purposes only. It does not constitute financial or investment advice. Bitcoin and Layer 2 protocols involve technical and financial risk. Always do your own research and understand the tradeoffs before using any protocol.