What is a CBDC?

A CBDC works as a new, digital form of central bank money next to the two forms that exist today: cash for everyone and deposits at the central bank for banks. The Swiss National Bank (SNB) explained it this way on its website. Money in a bank account is different: it is a claim on the commercial bank.

The BIS describes how each type changes the system. Wholesale CBDCs "build on the current two-tier structure": the central bank holds accounts for banks, and the banks serve the customers. A retail CBDC gives the public a direct claim on the central bank, like cash. Retail CBDCs "do not entail any credit risk for payment system participants", in the words of the BIS. It names two designs for access to a retail CBDC: token-based, with a digital signature and cash-like anonymity, and account-based, tied to a verified identity.

A wholesale CBDC is for payments between financial institutions, and a retail CBDC is for payments by people and companies. The SNB compares the two as follows (SNB, CBDC):

What is wholesale CBDC good for? The BIS points to conditional payments: a payment settles only if set conditions are met, which goes further than delivery versus payment in the current RTGS systems.

The CBDC examples in Europe are the proposed digital euro, the wholesale work of the Eurosystem and the Swiss Helvetia pilot.

• Digital euro: a retail CBDC for the euro area. A pilot starts in the second half of 2027, and a first issuance is possible during 2029. Details in What is the digital euro?
• Pontes: the Eurosystem's solution that links market DLT platforms to TARGET Services. Participants settle with cash tokens on a Eurosystem DLT platform or in T2. The ECB launched it on September 21, 2026 (ECB, Pontes). A second track, Appia, studies a long-term tokenized system.
• Helvetia: since the end of 2023 the SNB issues wholesale CBDC in Swiss francs on the SIX Digital Asset Platform. The pilot runs until at least June 2028 (SNB, Project Helvetia).

A CBDC is not a cryptocurrency, and whether it is legal tender depends on the law of each country. The SNB describes cryptocurrencies as issued on a decentralized basis, not pegged to a national currency and very volatile in value. A CBDC is issued by the central bank in the national unit of account.

Legal tender status comes from law, not from technology. For the digital euro, Article 7 of the Commission proposal would grant it. The wholesale CBDC in the Helvetia pilot is, according to the SNB, "in both economic and legal terms" a representation of sight deposits at the SNB in a technically different form.

In Germany and Austria, a retail CBDC would be the digital euro, issued by the Eurosystem with the Deutsche Bundesbank and the Oesterreichische Nationalbank. It needs an EU regulation first; the proposal is in negotiation. For wholesale settlement, banks in both countries can use Pontes. The Eurosystem site of the BIS Innovation Hub opened in March 2023 with offices in Frankfurt and Paris, hosted by the Deutsche Bundesbank and the Banque de France, and wholesale CBDC is one of its focus areas (BIS Innovation Hub). The Deutsche Bundesbank, whose Central Office is in Frankfurt, built the Trigger Solution, one of three solutions the Eurosystem tested from May to November 2024 for settling DLT transactions in central bank money. 25 institutions explored it (Bundesbank, Trigger Solution). BaFin and the FMA supervise the banks.

In Switzerland the SNB sees no case for a retail digital franc at present and runs the wholesale pilot Helvetia. Eligible banks include UBS, Raiffeisen Switzerland, Zürcher Kantonalbank and Commerzbank. To take part, a bank needs a sight deposit account at the SNB and admission to the SIC system. FINMA supervises Swiss banks. This page gives no legal advice.