CBDCs and the future of money: A global shift towards sovereign digital currency

Business Mayor

20-05-2025

Central Bank Digital Currencies (CBDCs) have rapidly evolved from theoretical discussions into a tangible component of modern financial systems. Once confined to academic and policy circles, interest in CBDCs surged following the 2008 financial crisis and the emergence of cryptocurrencies like Bitcoin, which challenged conventional banking structures. A major catalyst came in 2019 with Facebook's announcement of the Libra project, prompting central banks to act swiftly to safeguard monetary sovereignty. Since then, CBDCs have emerged as a transformative innovation, with central banks across the globe embracing this evolution.
While each country's path towards CBDC adoption varies based on its financial infrastructure, technological maturity and policy objectives, the overarching goal remains clear: to create a more inclusive, efficient and resilient monetary system for the digital age.
For those new to the concept, understanding CBDCs begins with connecting it to familiar experiences. A CBDC is a digital form of a country's official currency, issued and regulated by its central bank. Unlike decentralised cryptocurrencies such as Bitcoin, CBDCs are government-backed digital fiat currencies, designed to serve as legal tender for everyday transactions. Think of it as digital cash: individuals could use it to buy groceries, pay for services, or send money instantly and securely just by using a smartphone.
Unlike balances in mobile wallets like e-Sewa or funds held in bank accounts, CBDCs carry the full backing of the government. For users, this translates into a more reliable and accessible payment method, particularly beneficial in underserved or remote areas. By merging the convenience of digital payments with the security of central bank backing, CBDCs aim to democratise access to financial services.
As the world becomes increasingly digitised with growing reliance on smartphones, online banking and mobile payments, central banks recognise the urgency of modernising money itself. The proliferation of digital wallets, cryptocurrencies and fintech platforms has reshaped public expectations around speed, security and accessibility in financial services.
In response, countries are actively exploring and launching CBDCs to ensure that their national currencies remain relevant and effective in a digital-first world. Today, more than 130 countries representing over 95 per cent of global GDP are researching, developing, or piloting CBDCs. From China's digital yuan to India's e₹, nations are not merely adapting to change but leading it, seeking to build more resilient, inclusive and future-ready monetary ecosystems.
Some countries have already taken significant steps. Nigeria, the Bahamas and Jamaica have fully launched their digital currencies. Meanwhile, the European Union and the United Kingdom are advancing their respective projects the digital euro and 'Britcoin'. Even the United States is conducting extensive research, though it has yet to formally commit to a national rollout. These efforts collectively underscore that CBDCs are not just a passing trend, but a cornerstone of the future financial architecture.
International cooperation is also gaining momentum. Initiatives such as 'mBridge', led by the Bank for International Settlements, involve countries like China, the UAE and Thailand in piloting cross-border CBDC transactions. These collaborative ventures demonstrate CBDCs' potential not only to enhance domestic monetary systems but also to improve global financial integration and efficiency.
Nepal, too, is embracing this digital transformation. The Nepal Rastra Bank (NRB) is actively working towards introducing a Central Bank Digital Currency, marking a significant step in modernising the nation's financial landscape. With technical support from the Bank for International Settlements, NRB has developed a CBDC prototype using the Hyperledger Fabric blockchain and completed a comprehensive feasibility study.
A pilot launch is targeted for 2026, with the system designed to support both wholesale and retail transactions. The goal is to enhance financial inclusion, reduce dependency on physical cash and improve the transparency and efficiency of payments. Legal frameworks are currently being prepared to ensure secure and regulated implementation. If successfully executed, Nepal's CBDC initiative could play a pivotal role in creating a more inclusive and digitally empowered economy, while keeping pace with global financial trends.
What's clear is that CBDCs are no longer just theoretical constructs, they are becoming a reality, shaping the next chapter of sovereign finance. However, the motivations behind CBDCs vary: advanced economies often focus on payment system modernisation and sovereignty over monetary policy, while developing nations see CBDCs as tools for expanding financial access, reducing cash dependency and boosting digital innovation. As more countries take concrete steps towards digital currencies, the global financial landscape is poised for a significant shift.
Despite the existing challenges such as cybersecurity, privacy and infrastructure, the promise of CBDCs remains compelling: a secure, efficient and accessible monetary system tailored for the digital age. The transition to CBDCs is not merely a financial evolution, it is a defining transformation in the future of money.