Stablecoins versus central bank digital currencies

Paying with a token on your phone may feel the same whether it is a stablecoin or a digital currency issued by a central bank. On screen, both show a balance in dollars, euros or reais. Behind the scenes, they are very different things.

This article compares the two models on what matters to users: who issues them, who guarantees their value and what happens in a crisis. It also shows where the most frequently cited public projects in Brazil and Europe stand as of October 2026. If you are not yet familiar with how stablecoins work, start with What stablecoins are and how they hold their value.

Two forms of digital money

A stablecoin is a crypto-asset that tries to keep a fixed value relative to an official currency. It is issued by a private company, which receives money, holds reserves and promises to pay back the face value to anyone who redeems.

A central bank digital currency, known by its acronym CBDC, is money issued directly by the monetary authority, in digital form. It is an obligation of the central bank itself, like the banknote in your wallet.

There are two types of CBDC. A retail CBDC would be used by people and businesses in everyday life, as a digital version of cash. A wholesale CBDC is restricted to banks and financial market infrastructures and is used to settle transactions between them. To settle is to actually complete a payment, with the final transfer of the money.

According to the International Monetary Fund (IMF), the two instruments differ in issuer, risk, legal status, means of transfer and potential for illicit use (IMF, Understanding Stablecoins, 2025). The table summarizes these differences.

Feature	Stablecoin	Retail CBDC
Who issues it	Private company	Central bank
Whose debt it is	The issuer’s	The central bank’s
What backs its value	Reserves and the right of redemption	The central bank itself
Fixed nominal value	Sought, but may fluctuate in the market	Always face value
Where it circulates	Always on a blockchain	Technology chosen by the central bank
Wallets without an intermediary	Common	Little explored in projects

Two rows need explanation. The IMF notes that, unlike CBDCs, stablecoins do not always deliver nominal value stability, and that most holders depend on exchanges to sell, where the price can drift away from parity. The same report points out that stablecoins can be kept in self-custodied wallets, a feature little explored in CBDCs because of anti-money laundering requirements.

The money test, according to the BIS

The Bank for International Settlements (BIS), which brings together central banks, proposed three tests in 2025 to assess whether a form of money can underpin the monetary system (BIS, Annual Economic Report 2025).

• Singleness. One real has to be worth one real, whatever the bank or app. Today this happens because payments between banks are settled in reserves at the central bank.
• Elasticity. The system must be able to supply money when and in the amount the economy needs it, including for large payments.
• Integrity. Money must resist fraud, laundering and the financing of illicit activities.

The BIS concludes that stablecoins perform poorly on all three. They fail on singleness because tokens from different issuers can trade at different prices and there is no settlement on the central bank’s balance sheet. They fail on elasticity because the holder has to pay in full, up front, for each token, and the issuer’s balance sheet cannot expand at will. And they fail on integrity because they work as pseudonymous bearer instruments that circulate without anyone knowing who the owner is. In the BIS’s assessment, they can play at most a supporting role.

It is worth noting who is speaking. The BIS represents central banks, which are an interested party in this dispute. Even so, the tests help explain why authorities treat the subject as a matter of stability, not just innovation.

What central banks are doing

The latest BIS survey, with data from the end of 2024, shows that 85 of 93 central banks, or 91%, were working on some kind of CBDC (BIS Papers No. 159, August 2025). Wholesale projects were more advanced than retail ones. In advanced economies, 38% of central banks were running wholesale CBDC pilots.

In retail, only three countries had a CBDC in operation: the Bahamas, Jamaica and Nigeria. No new one was launched in 2024.

Stablecoins appear as an explicit motive. According to the same survey, more than a third of central banks accelerated their CBDC work because of them and other crypto-assets. The report also notes that the use of stablecoins for payments outside the crypto environment was still limited in most countries, with broader use reported only in some emerging economies, mainly for remittances.

In Europe, the wholesale path has already moved beyond paper. On September 21, 2026, the Eurosystem launched Pontes, a solution that allows wholesale transactions involving tokenized assets to be settled in central bank money, with full implementation planned for 2028 (ECB, September 21, 2026). Tokenized assets are securities and other assets represented as tokens on a digital ledger.

Digital euro: where the project stands

The digital euro is the most discussed retail CBDC among major economies. In October 2025, the European Central Bank (ECB) moved the project to a new phase, focused on technical preparation. The bank said it will only decide whether and when to issue after the legislation is adopted. If the law is passed in 2026, the ECB is working toward a pilot from mid-2027 and a possible first issuance in 2029. The estimated development cost is around 1.3 billion euros up to the first issuance, and the operating cost around 320 million euros a year from 2029 (ECB, October 30, 2025). The pilot page mentions 12 months of testing from the second half of 2027, with 36 payment service providers (ECB, digital euro pilot).

The law is still under negotiation. The Council of the European Union settled its position in December 2025. It provides for offline use, a high degree of privacy and a limit on how much each person can hold in digital euros, set by the ECB within a ceiling agreed by the Council (Council of the EU, December 19, 2025). The European Parliament approved its negotiating mandate in July 2026. In its September 20, 2026 update, the Parliament’s official tracker still recorded no agreement, and holding limits had not been discussed at political level (European Parliament, Legislative Train).

The holding limit exists for a reason: to prevent people from pulling money out of banks en masse to keep it in digital euros, which would reduce banks’ capacity to lend. It is the same kind of concern central banks have about stablecoins.

Drex: what changed in the Brazilian project

Drex was born as the Central Bank of Brazil’s platform for testing tokenized money and assets on a distributed ledger (distributed ledger technology, or DLT, the family of technologies to which blockchain belongs). The pilot had two phases. In the report on the first, published in February 2025, the BC concluded that “further study” was needed to ensure the platform met privacy and data protection requirements (MundoCoop, March 2025).

According to a December 2025 report by Exame, a Brazilian business magazine, the BC decided to shut down the pilot platform, and its president, Gabriel Galípolo, said the technology tested “did not prove viable”. He said the project had not been abandoned and that “today there are other ways” to reach the goal. The report describes a new phase without blockchain, aimed at making it easier to use assets as collateral in credit operations (Exame, December 30, 2025).

As of October 8, 2026, the editorial team had not found any official BC announcement with a launch date or final scope for this new phase. One consequence is clear: Drex, in its current form, is not a retail digital currency for the public. Anyone announcing that “the digital real has arrived” to sell a product or ask for registration should be treated with suspicion.

United States: stablecoins yes, CBDC no

The US took the opposite path to Europe. An executive order of January 23, 2025 bars federal agencies, unless required by law, from creating, issuing or promoting a CBDC, and orders existing plans to be terminated. The same order sets as policy the promotion of dollar-backed stablecoins (White House, January 23, 2025). Months later, the country passed a federal stablecoin law, covered in detail in Stablecoin regulation: an international overview.

The IMF records the contrast: the US halted exploration of a retail CBDC and Canada scaled back its work in this area, while China and the euro area remain at an advanced stage (IMF, 2025).

Competition or coexistence

For the IMF, the two may compete if they are seen as close substitutes. This becomes more likely the safer stablecoins are and the more integrated into the payment system, for example if issuers have access to central bank accounts. They can also coexist, each in different uses. One practical difference: stablecoins circulate on public blockchains and are used to trade crypto-assets, while a retail CBDC would not generally be an asset used in that environment.

There is also a question of sovereignty. According to the IMF, 97% of stablecoins issued were pegged to the dollar, and the market totaled around 300 billion dollars in September 2025. In countries with high inflation or little confidence in the local currency, dollar stablecoins can accelerate currency substitution, when the population starts using a foreign currency in place of the national one. This weakens local monetary policy. Part of the interest in CBDCs stems from this concern.

Risks for users of each

The risks are not the same, and neither model is free of them.

• Stablecoin. You depend on a private company and its reserves. The price may fall below parity in a crisis, the issuer may freeze tokens, and there is no deposit guarantee. The loss can be total. The comparison between the two largest is in USDT versus USDC: mechanisms, reserves and risks.
• CBDC. The credit risk is that of the state itself, the lowest possible in the national currency. The risks cited by the IMF are different: operational, integrity, consumer protection and financial stability if the design is poor. There is also the privacy debate, since a central bank would take on a direct role in everyday payments. That is why projects such as the digital euro put privacy and holding limits at the center of the legal discussion.
• Scams. Both topics attract fraud. Offers of a “government digital currency” with returns or early registration have no official backing. See Digital financial scams: how to avoid them and how to react.

Key takeaways

• A stablecoin is a private promise of fixed value; a CBDC is central bank money. The difference lies in who owes you.
• The BIS considers that stablecoins fail the tests of singleness, elasticity and integrity. This is the central banks’ view, as an interested party, but it explains the authorities’ stance.
• Most progress on CBDCs is in wholesale, between banks. In retail, only three countries had one in operation at the end of 2024.
• As of October 2026, the digital euro depended on a law still under negotiation, Drex had been redesigned with no public launch date and the US had barred its agencies from creating a CBDC.
• Before using any digital currency, ask who issues it, who guarantees redemption and what happens if that issuer fails.