What is a CBDC? Digital dollars, digital pounds and where the US, UK and Canada stand

You may have heard warnings that a “digital dollar” is coming, or that central banks want to replace cash with programmable money. The term behind those headlines is CBDC: central bank digital currency. This guide explains what a CBDC actually is, how it differs from the money and crypto you already know, and what the US, the UK and Canada have officially said about it.

What a CBDC is

The January 2025 US executive order on digital financial technology gives a clear definition. A CBDC is:

a form of digital money or monetary value, denominated in the national unit of account, that is a direct liability of the central bank.

In plain terms:

• It’s digital, held in an app or wallet rather than on paper.
• It’s in the national currency: one digital dollar would always be worth one dollar.
• It’s issued by, and owed by, the central bank itself, like a banknote, rather than by a commercial bank or a private company.

When people discuss CBDCs for the public, they usually mean a retail CBDC, which households and shops would use for everyday payments. Central banks also study wholesale versions, used only between banks and financial institutions. This guide focuses on the retail kind.

How it differs from the money you already use

The difference with bank deposits matters most. Most money people use today is already digital, but it’s a promise from a commercial bank. A CBDC would be a direct claim on the central bank, like cash.

The difference with stablecoins is who stands behind them. A stablecoin is issued by a private company that holds reserves. In the US, the GENIUS Act of 2025 requires payment stablecoin issuers to hold at least one dollar of permitted reserves for every dollar issued. See stablecoins explained.

United States: CBDCs are off the table

On 23 January 2025, the President signed the executive order “Strengthening American Leadership in Digital Financial Technology”. It states that federal agencies are prohibited from undertaking any action to establish, issue or promote CBDCs within the United States or abroad, and that any ongoing agency plans or initiatives related to creating a CBDC must be immediately terminated.

The order explains the policy by saying CBDCs threaten the stability of the financial system, individual privacy and the sovereignty of the United States. As a result, there’s no US digital dollar in development by federal agencies.

United Kingdom: no decision yet on a digital pound

The Bank of England and HM Treasury have been studying a digital pound. When we checked the Bank’s page, it said:

• No decision has been made on whether to introduce a digital pound.
• The Bank is in a design phase, looking at the technology and policy requirements, including testing and engagement.
• The earliest a digital pound could be issued would be the second half of this decade.
• A digital pound would be issued directly by the Bank of England, much like banknotes.

The Bank’s page also sets out where the project stands. In October 2025 it published an update on the design phase, and it is developing a detailed blueprint, supported by experiments in a Digital Pound Lab. Those findings feed a joint assessment by the Bank and HM Treasury ahead of a decision on next steps in 2026. When we checked in October 2026, the page still said no decision had been made on introducing a digital pound.

On the most common concerns, the Bank says that it and the government would not collect your personal data or see how you spent your digital pounds, and would not be able to program them or restrict how you spent them. It also says there would need to be a limit on how much each person could hold, not yet decided but high enough for day-to-day spending, to give it time to understand the impact on the financial system and avoid disruption. And it says a digital pound would not replace cash: it would work alongside it.

Canada: work scaled down

The Bank of Canada spent several years researching a digital Canadian dollar, including a public consultation. In September 2024, it said that, recognizing there was not currently a compelling case to move forward, it was scaling down its work on a retail CBDC and shifting its focus to broader payments research and policy.

Its digital dollar page says the research was done so it would be ready in case one is needed in the future, if Canadians, through their elected representatives, decide they want or need one.

The euro area: a digital euro in preparation

In the euro area, the European Central Bank has moved its project into preparation. According to its digital euro pages:

• In October 2025, the ECB’s Governing Council decided to move the project to its next phase.
• The ECB aims to be ready for a potential first issuance during 2029, assuming the necessary EU legislation is adopted in the course of 2026.
• It’s preparing a pilot in 2027, and in July 2026 it published a new draft of the digital euro rulebook (version 0.91) after a market consultation.
• It describes the digital euro as a digital form of cash, free of charge for anyone to use, usable online or offline, and says the ECB and the Eurosystem wouldn’t be able to identify who you are or what you’re buying from the payment data they get.
• It says the digital euro would complement banknotes and coins, not replace them.

Where things stand

The arguments, briefly

Supporters and critics often talk past each other. The main points raised in official statements:

• Privacy: the US order lists individual privacy as a risk. The Bank of England, for its part, says it wouldn’t see how people spent digital pounds.
• Financial stability: the US order cites the stability of the financial system as a risk. The Bank of England says a holding limit would help it avoid disruption to the financial system.
• Public money in a digital world: as cash use falls, some central banks want to make sure people can still hold money issued directly by the state. Others, like the Bank of Canada, haven’t found a compelling case yet.

What this means for you today

• Nothing changes now. None of the three countries has issued a retail CBDC.
• Be wary of scams. Fraudsters use topical terms. Any “digital dollar”, “digital pound” or “CBDC token” offered for sale is not issued by a central bank.
• Know what you hold. Stablecoins and crypto are private products with their own risks. See is your crypto insured?

For how today’s crypto networks work, see what is a blockchain? and bitcoin vs Ethereum.