What Are the Two Common Types of CBDC?

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Unraveling the complexities of digital currencies can be a headache. The two common types are wholesale and retail Central Bank Digital Currencies (CBDCs). Our article demystifies these terms, explaining their features and how they function within an economy.

Let’s navigate this exciting yet often confusing terrain together.

Key Takeaways

  • Central Bank Digital Currencies (CBDCs) are digital forms of currency issued by a country’s central bank. They aim to provide a secure and efficient payment system while maintaining control over monetary policy.
  • There are two common types of CBDCs: wholesale and retail.
  • Wholesale CBDCs are designed for financial institutions, like banks, to use for large – value transactions between them. Retail CBDCs, on the other hand, are for the general public to use in their everyday transactions.
  • Wholesale CBDCs focus on improving payment systems’ efficiency, while retail CBDCs offer a digital alternative to physical cash accessible to everyone.

Understanding Central Bank Digital Currencies (CBDCs)

Central Bank Digital Currencies (CBDCs) are digital forms of currency issued by a country’s central bank, aiming to provide a secure and efficient payment system while maintaining monetary policy control.

Definition of CBDCs

CBDCs are a type of digital money. They are made by central banks. Central Bank Digital Currencies (CBDCs) tie to the value of real country’s money. You can use them like cash on the internet.

It is not Bitcoin or other crypto coins because CBDCs get their value from the country, not people buying and selling it.

Goals of CBDCs

The goals of Central Bank Digital Currencies (CBDCs) include increasing efficiency and reducing costs in financial transactions. CBDCs aim to enhance financial inclusion by providing access to digital payment systems for those who don’t have traditional banking services.

They also seek to strengthen monetary policy by offering greater control over the money supply and promoting stability in the economy. Additionally, CBDCs aim to address issues related to privacy, security, and fraud prevention.

By achieving these goals, CBDCs have the potential to revolutionize the financial industry and improve how transactions are conducted for individuals and businesses alike.

Types of CBDCs

There are two common types of CBDCs: Wholesale CBDCs and Retail CBDCs.

Wholesale CBDCs

Wholesale CBDCs are a type of Central Bank Digital Currency designed for use by financial institutions, like banks. These digital currencies are used for large-value transactions between banks and other financial entities.

Unlike retail CBDCs, which are used by the general public for everyday transactions, wholesale CBDCs focus on facilitating interbank transactions. They can offer benefits such as increased efficiency and reduced costs compared to traditional payment systems.

Wholesale CBDCs can coexist alongside retail CBDCs in the same economy, providing a variety of options for different types of transactions and users.

Retail CBDCs

Retail CBDCs are a type of Central Bank Digital Currency that is designed for use by the general public in their everyday transactions. This means that regular people like you and me can use retail CBDCs to make purchases, pay bills, and send money electronically.

It offers a digital alternative to physical cash, making transactions more convenient and efficient. Retail CBDCs can be accessed through various digital payment systems or mobile applications, allowing users to easily manage their money digitally.

It also has the potential to increase financial inclusion by providing access to digital payments for those who may not have access to traditional banking services. Retail CBDCs are an important development in the world of finance and have the potential to reshape how we handle our money in the future.

Differences Between Wholesale and Retail CBDCs

Wholesale CBDCs are designed for financial institutions and aim to improve the efficiency of payment systems, while retail CBDCs target consumers and businesses, providing a digital form of money accessible to the general public.

Target audience

Wholesale CBDCs are designed for financial institutions, such as banks and central banks, to use for large-value interbank transactions. These types of CBDCs are not intended for everyday use by the general public.

On the other hand, retail CBDCs are specifically created for the general public to use in their daily transactions. This means that consumers and businesses can directly access and utilize retail CBDCs like they would with physical money or digital payment systems.

Both wholesale and retail CBDCs have different target audiences based on their specific functionalities within the economy.

Access and usability

Wholesale CBDCs are mainly designed for financial institutions and are used for large-value transactions between banks. These types of CBDCs have limited access, with only authorized financial institutions being able to use them.

On the other hand, retail CBDCs are designed for the general public and offer widespread access and usability. Retail CBDCs can be used by anyone for everyday transactions, making digital payments more accessible to consumers and businesses alike.

The goal is to provide a user-friendly system that allows everyone, including those who may not have access to traditional banking services, to participate in the digital economy easily.


Implementing wholesale and retail CBDCs requires careful planning and coordination. The central bank needs to work with financial institutions to establish the necessary infrastructure for wholesale CBDC transactions between banks.

This includes creating a secure digital ledger system, providing training on how to use the CBDC, and ensuring that all participating banks have the technology in place to support the new digital currency.

For retail CBDC implementation, the central bank must focus on making the digital currency accessible to the general public by developing user-friendly mobile apps or electronic wallets that allow individuals to store, send, and receive CBDCs easily.

It is also important for the central bank to educate consumers about using retail CBDCs and ensure that there are sufficient points of acceptance where people can use their digital currency for everyday transactions.


There are two common types of CBDC: wholesale and retail. Wholesale CBDC is for financial institutions to use for big transactions, while retail CBDC is for the general public to use for everyday transactions.

Both types have their own unique advantages and can coexist within the same economy, potentially transforming how we conduct transactions in the future.


What are the two common types of CBDC?

The two common types of Central Bank Digital Currency (CBDC) are tokens and deposit accounts.

How do design choices affect these two types of CBDC?

Design choices in financial technology, like decentralized ledger or blockchain technology, can impact how CBDC tokens and deposit accounts work.

When will a bank launch a new type of CBDC?

A bank chooses the launch date for new forms of CBDC based on its readiness in adopting cryptocurrency options within their systems.

Are there any downsides to using these types of CBDC?

Yes, each kind has its disadvantages that must be understood before use in financial transactions.



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About the Author:
Alex Sterling stands at the forefront of blockchain innovation, offering a technical perspective rooted in a Computer Science background. Specializing in decentralized systems, Alex's articles dissect blockchain technologies and crypto market trends, making intricate details comprehensible for readers. They are deeply involved in blockchain project development, frequently sharing their technical expertise at tech conferences. Alex's work aims to educate and inspire readers about the transformative potential of blockchain and cryptocurrency.