What Will a U.S. Central Bank Digital Currency Look Like?

A U.S. central bank digital currency (CBDC) would be a digital form of the U.S. dollar issued as a direct liability of the Federal Reserve, while private intermediaries could provide customer-facing wallets and services; tokenization and blockchain are possible design choices rather than required features. Its regulatory framework and legal-tender status remain unresolved, but as a direct Federal Reserve liability, it would carry no credit or liquidity risk.

With a future U.S. CBDC, the public could use an electronic form of central bank money in addition to physical cash; digital balances held in individual or corporate bank accounts, by contrast, are commercial bank money. As of May 2026, the United States doesn’t have a CBDC, and current federal policy prohibits agencies from establishing, issuing, or promoting one. It’s still important to understand the concept, as well as the benefits and risks attached and steps taken so far.

What Is a U.S. Central Bank Digital Currency (CBDC)?

Forms of money have continually evolved since the days when people accepted seashells for payment. Major economies moved from gold standards to fiat currency at different times. Digital currencies are yet another money metamorphosis.

Fiat currency is a government-issued currency that’s not backed by a physical commodity such as gold or silver. It’s backed by the government that issues it. This type of money is the dominant means of making transactions in most countries. People use it to facilitate the exchange of goods and services in an economy. Generally, a country’s central bank issues fiat currency for the nation’s use. The Federal Reserve plays this role in the U.S.

A U.S. CBDC would serve as a complement to existing central bank reserve account balances and widely used fiat currency. As a bonus, it could support faster, more streamlined cross-border transactions.

Understanding a U.S. CBDC

Even the Federal Reserve acknowledges the technological innovation of digital assets as a form of money. But the Fed warns that there are risks that might leave customers vulnerable to theft and fraud, despite its understanding of the potential. A U.S. CBDC could share some digital-security risks with other digital assets but would have materially different financial and institutional characteristics.

In its 2022 exploratory analysis, the Fed described a potential retail U.S. CBDC as a safe digital asset accessible to the public. It said such a CBDC would have no credit or liquidity risk and should be privacy-protected, intermediated, transferable, and identity-verified.

• Privacy protection implies safeguarding consumers’ privacy rights as well as impeding criminal activity.
• Intermediated means that the Federal Reserve would permit the management and payment of CBDC via digital wallets and accounts offered in the private sector, including commercial banks and nonbanks.
• Transferable means that the CBDC would be accessible to U.S. customers regardless of the intermediaries they use, making payment more efficient.
• Identity-verified protections aim to prevent money laundering and the financing of terrorism by verifying whoever adopts the CBDC.

The Federal Reserve’s 2022 analysis considered households, businesses, entrepreneurs, and consumers, including whether a CBDC could provide payment services more effectively than alternative methods.

Requirements for a U.S. CBDC

Specific requirements must be satisfied before the U.S. issues a digital currency to the public. Some of these developed through years of intensive study by policymakers and Federal Reserve staff include:

• A U.S. CBDC should provide benefits to U.S. households, businesses, and the overall economy that exceed its costs and risks.
• It must yield these benefits more effectively than alternative fiat or physical money.
• The U.S. CBDC should complement rather than replace existing forms of money and methods for providing financial services.
• It must protect consumer privacy and prevent criminal activity.
• It must receive support from critical stakeholders.

Advantages and Disadvantages of a U.S. CBDC

The Federal Reserve has identified the advantages and disadvantages of having a CBDC in circulation. The following are some of the key benefits and risks.

Advantages

A U.S. CBDC should safely meet future needs for payment services and be free of credit risk and liquidity risk for the public.

1. The currency should improve cross-border payments and use underlying technology in a simplified distribution channel for payments, as well as interoperability among different jurisdictions.
2. It should support the dollar’s international role and benefit the public and government by contributing to reducing transaction and borrowing costs.
3. It should be financially inclusive, potentially helping lower transaction costs and assisting lower-income households.
4. It should give the public access to safe central bank funds by increasing the payment options available.

Disadvantages

A U.S. CBDC could affect the financial structure of the U.S. and alter the duties and responsibilities of the private sector and the central bank.

1. The safety and stability of the financial system could be compromised during the conversion process from another form of money to a CBDC. This could trigger instability and even runs on financial institutions.
2. The effectiveness of the nation’s monetary policy implementation could be lessened. It is unknown how a CBDC would affect the interest on reserve balances and how the Fed would use the money supply as a tool.
3. Privacy and data protection issues and financial crimes could threaten consumers’ privacy rights and result in the loss of assets.
4. Operational resilience and cybersecurity could pose problems because a CBDC is prone to the same threats as existing payment services.

Executive Order on a U.S. CBDC

The White House Office of Science and Technology Policy (OSTP) and former President Biden had worked together on research and planning for a possible a U.S. CBDC. The president’s interest was explicit when he shared the importance of using technology “to advance democracies to lift people up, not to hold them down.”

In March 2022, Biden directed the OSTP, in partnership with other institutions, to scrutinize and come up with a viable answer to the question of digital assets and a U.S. CBDC. The White House outlined research and planning for a potential digital dollar if one were deemed appropriate and in the national interest.

Over roughly six months, several federal agencies collaborated on a report required by the order. Among the topics and recommendations it addressed were:

• Policy objectives for a U.S. CBDC system
• Interconnected technical and financial design choices
• Digital assets research and development (R&D) agenda

President Donald Trump, on the other hand, is firmly opposed to the creation and implementation of a CBDC. He has repeatedly described a CBDC as a dangerous threat to freedom, warning that it could enable the federal government to monitor, control, or even confiscate Americans’ money without their consent. As president during his second term, Trump issued an executive order in January 2025 that explicitly prohibits federal agencies from establishing, issuing, or promoting a CBDC in the U.S. or abroad. The order also directed the immediate termination of ongoing agency plans or initiatives to create a CBDC within U.S. jurisdiction, except as required by law.

Central Bank Digital Currencies Around the World

Many countries around the world are considering, researching, or developing CBDCs. The Atlantic Council tracks varying progress around the world; as of February 2025, the organization had observed:

• 3 countries have fully launched CBDCs (The Bahamas, Jamaica, and Nigeria)3 countries had launched CBDC (Jamaica, The Bahamas, and Nigeria)
• 41 countries have launched a pilot
• 33 countries have CBDCs under development
• 40 countries are researching CBDCs

As of May 2026, 18 G20 members were in advanced stages of CBDC exploration, while the United States was not exploring one. Of those, 14 G20 members are in the pilot stage, including Brazil, Japan, India, Australia, Russia, and Turkey.

Differences Between the U.S. CBDC and Cryptocurrency

It is easy to confuse a CBDC and cryptocurrency but they aren’t the same. A U.S. CBDC will be centralized and under the purview of the Federal Reserve, the U.S. central bank. Public, permissionless cryptocurrencies are decentralized, and self-custodied cryptocurrency gives users direct control of their private key.

Cryptocurrencies and CBDCs can both run on distributed ledgers or blockchains, but they can differ in who controls the network and how consensus is reached (and if it is needed). Leading public cryptocurrencies use large networks, but consensus is handled by specialized nodes, miners, or validators rather than all users. A CBDC would likely avoid a public permissionless blockchain and use a centralized or permissioned ledger; its transparency would depend on the system’s access and privacy settings.

The Bottom Line

CBDCs are digital forms of central bank money; retail CBDCs are widely available to the general public. They use technology to help include the bankless population in the financial system. As of May 2026, 146 countries and currency unions were exploring the possibility of incorporating CBDCs into their financial systems.

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