Digital Currencies: From Idea to Implementation

The following excerpt is from Chapter 8 — ORF Global Quarterly | Energy and Tech: Powering the Future

For much of the past decade, scholarly and policy discourse on digital currencies has remained largely prospective. Central banks commissioned feasibility studies, launched pilot programmes, and often deferred implementation, while proponents and sceptics alike debated futures untested at scale. Today, with 146 countries, representing 98 percent of global Gross Domestic Product (GDP), exploring or developing central bank digital currencies (CBDCs), and 11 BRICS nations pursuing similar initiatives, the central question is no longer whether sovereign digital money will emerge but what institutional form it will take, who will govern it, and whose economic interests it will serve.^[1]

Concurrently, a parallel transformation has advanced with less institutional fanfare. The emergence of privately issued stablecoins, now subject to comprehensive regulation by a major economy for the first time,^[2] is restructuring the architecture of global payments in ways that central bank frameworks neither fully anticipated nor have adequately addressed.

Two distinct but intersecting trends define the current landscape. The first is the uneven progress of CBDCs, technically ambitious yet politically complex. The second is the rapid institutionalisation of dollar-pegged stablecoins, accelerated by the passage of the United States GENIUS Act in July 2025, which has transformed these instruments from reputational risks into regulated financial infrastructure.^[3] In 2024, stablecoin transfer volume surged to US$27.6 trillion, more than Visa and Mastercard combined. That figure alone signals that the centre of gravity in digital currency has shifted from government-led experiments to market-driven reality.^[4]

The CBDC Problem

China’s digital yuan remains the most advanced CBDC deployment among major economies, with programmable payment functionality already in operation. Brazil’s Drex initiative has stepped back from a blockchainbased architecture because of privacy and scalability concerns, narrowing its focus to collateral management and reconciliation while targeting a public launch in mid-2026.^[5] The Riksbank recommends establishing an enquiry to examine the legislative changes required for introducing an e-krona within a reasonable timeframe, should the Swedish Parliament decide to authorise the Riksbank to issue one.^[6] The enquiry is proposed to begin after the European Union’s digital euro legislation is finalised and the European Central Bank makes a formal decision on issuing a digital euro. The process could be initiated either by the Government directly or through a parliamentary request instructing the Government to establish the enquiry. In Europe, policymakers have framed the digital euro partly as a measure to reinforce monetary and payment-system sovereignty in the face of increasing reliance on non- European digital platforms, though differences of opinion between the ECB, the European Commission, and the European Parliament over the appropriate approach remain unresolved.^[7]

India’s experience is instructive precisely because it is the most honest available data point on what happens when a CBDC meets a mature digital payment ecosystem. Daily retail e-rupee transactions have fallen from a peak of one million to approximately 100,000, a stark indication of limited public enthusiasm. By March 2025, the retail pilot included 17 banks and over six million users, with circulation reaching ₹10.16 billion, a notable increase from the previous year. The Indian case reveals a fundamental design challenge that applies globally.^[8] Where real-time payment infrastructure already exists and functions well, a CBDC must offer something meaningfully different to justify adoption. Convenience alone is insufficient. The answer may lie in programmability—specifically, conditional payments, targeted welfare disbursements, and offline capability in low-connectivity areas, but most current pilots have yet to deliver these features at scale.

The Stablecoin Acceleration

While CBDCs have struggled for traction, stablecoins have found it. Stablecoin transaction volume rose 83 percent between July 2024 and July 2025, reaching over US$4 trillion in the first half of 2025 alone and accounting for 30 percent of all on-chain crypto transactions.^[9] The regulatory development most responsible for accelerating this growth was the GENIUS Act, signed into law in the United States in July 2025. Hailed by President Donald Trump as a step towards cementing American dominance, the legislation established the first comprehensive federal framework for stablecoins, embedding structural demand for US Treasuries and reinforcing the dollar’s network effects in digital commerce.^[10]

The geopolitical implications of this development deserve more attention than they typically receive in financial commentary. Under the GENIUS Act, a merchant in Lagos accepting dollar stablecoins, a remittance recipient in Manila holding them rather than converting them to pesos, and a Venezuelan family preserving savings in them, all become indirect purchasers of US Treasury securities, channelling demand through end users worldwide and bypassing foreign central banks entirely. This is dollar hegemony extended into the crypto era not through coercion but through the structural logic of regulatory legitimacy and network effects.

The Global South Calculus

For the Global South, the digital currency transition presents a genuine strategic dilemma. The immediate benefits are tangible. Average global remittance costs remain near 6 percent, and settlement is not truly real-time even when customer-facing interfaces suggest otherwise.^[11] Stablecoins are introducing a parallel settlement layer that is beginning to structurally transform these corridors. For households in high-inflation economies, dollar stablecoins have become defacto savings instruments.

The long-run risks, however, are equally real. Widespread adoption of dollar stablecoins is, in economic terms, a form of dollarisation, carrying all the monetary sovereignty implications that entails. Countries that have spent decades building independent monetary infrastructure now face the prospect of their citizens voluntarily migrating to dollardenominated digital instruments that sit outside the reach of domestic monetary policy.

Nigeria’s experience captures the tension. The eNaira has seen modest retail adoption as a CBDC, but the launch of cNGN, a central bank-backed naira stablecoin interoperable with the eNaira, in 2025 marked an important course correction, contributing alongside structural reforms to increased remittance inflows.^[12] This hybrid approach—a sovereign stablecoin that competes on usability while preserving monetary control—may represent the most viable path for large developing economies.

India’s strategic position is more complex than most. Unified Payments Interface’s (UPI) dominance in domestic payments means that dollar stablecoins face a genuinely competitive alternative in the retail segment.^[13] The Reserve Bank of India’s (RBI) initiation of a retail sandbox for CBDC innovation in October 2025 suggests an awareness that the current approach requires recalibration.^[14]

What Could Alter the Trajectory in 2026

Three developments could materially change the course of this story. The first is implementation of the GENIUS Act’s full requirements, scheduled to take effect no later than January 2027. Full reserve and audit requirements for stablecoin issuers could consolidate the market significantly around a small number of well-capitalised players, potentially reducing competition and raising the cost of access for smaller economies and users.

The second is the trajectory of China’s digital yuan in international trade settlement. In July 2025, the People’s Bank of China Governor proposed a multipolar global monetary system that reduces US dollar dominance in favour of coexistence and competition among multiple sovereign currencies.^[15] If China succeeds in embedding the digital yuan into Belt and Road trade corridors, it would offer the Global South an alternative digital currency infrastructure that does not route through dollar-denominated rails, with different—but not necessarily smaller—geopolitical dependencies.

The third is whether CBDCs can find a compelling use case that justifies their complexity. The most plausible candidate is programmable welfare delivery: targeted, traceable, conditional transfers for social protection that existing payment systems cannot efficiently implement. If a major economy demonstrates this at scale in 2026, it could reframe the CBDC debate from payments competition to development infrastructure, a framing that is both more accurate and more politically durable.

The digital currency transition is no longer a question of whether it will happen. It is one of whose infrastructure it runs on, whose monetary interests it serves, and whether the countries that stand to gain the most from cheaper, faster, and more inclusive payments can shape the architecture before it is set.

Sauradeep Bag is Associate Fellow, Center for Digital Societies, ORF.

^[1] Atlantic Council, CBDC Tracker, 2026, https://www.atlanticcouncil.org/cbdctracker/.

^[2] United States Congress, S.1582 — GENIUS Act of 2025, Congress.gov, 119th Congress, 2025, https://www.congress.gov/ bill/119th-congress/senate-bill/1582.

^[3] United States Congress, S.1582 — GENIUS Act of 2025, Congress.gov, 119th Congress, 2025, https://www.congress.gov/ bill/119th-congress/senate-bill/1582.

^[4] World Economic Forum, Stablecoins and Cryptocurrency Are on the Rise: What This Means for Financial Systems, March 2025, https://www.weforum.org/stories/2025/03/stablecoins-cryptocurrency-on-rise-financial-systems/.

^[5] Aaron Stanley, “Brazil Abandons Blockchain For Its Drex CBDC Project,” Forbes, August 13, 2025, https://www.forbes. com/sites/digital-assets/2025/08/13/brazil-abandons-blockchain-for-its-drex-cbdc-project/.

^[6] Sveriges Riksbank, Recommendation for Riksdag and Government to Set Up an Inquiry On An e-Krona, March 12, 2026, https://www.riksbank.se/en-gb/payments–cash/payments-in-sweden/payments-report-2026/the-riksbanks-policyrecommendations/ recommendation-for-riksdag-and-government-to-set-up-an-inquiry-on-an-e-krona/.

^[7] Piero Cipollone, “The Digital Euro: Enhancing Payments in the Euro Area,” European Central Bank (ECB), February 19, 2026, https://www.ecb.europa.eu/press/key/date/2026/html/ecb.sp260219~e9f59ca8c0.en.html.

^[8] “E-rupee in Circulation Grows to Over Rs 1,000 Crore; RBI Exploring Cross-Border CBDC Pilots,” The Economic Times, May 29, 2025, https://economictimes.indiatimes.com/tech/technology/e-rupee-in-circulation-grows-to-over-rs-1000- crore-rbi-exploring-cross-border-cbdc-pilots/articleshow/121485395.cms?from=mdr.

^[9] “2025 Crypto Adoption and Stablecoin Usage Report,” TRM Labs, October 21, 2025, https://www.trmlabs.com/ reports-and-whitepapers/2025-crypto-adoption-and-stablecoin-usage-report.

^[10]The White House, Fact Sheet: President Donald J. Trump Signs GENIUS Act into Law, July 18, 2025, https://www.whitehouse. gov/fact-sheets/2025/07/fact-sheet-president-donald-j-trump-signs-genius-act-into-law/.

^[11] “Remittance Prices Worldwide Database,” World Bank, 2026, https://remittanceprices.worldbank.org/.

^[12] Central Banking, Nigeria to Reposition its Struggling CBDC, 2025, https://www.centralbanking.com/central-banks/ payments/7976086/nigeria-to-reposition-its-struggling-cbdc.

^[13] BIS, Speech/Remarks on Digital Currencies and the Future of Payments, Bank for International Settlements, December 2025, https://www.bis.org/review/r251216i.htm.

^[14] “RBI Launches Digital Currency Retail Sandbox,” The Economic Times, October 2025, https://economictimes.indiatimes. com/news/economy/policy/rbi-launches-digital-currency-retail-sandbox/articleshow/124388034.cms?from=mdr.

^[15] “China’s Central Bank Says Promote Digital Yuan in Multi-polar Currency System,” Reuters, June 18, 2025, https:// www.reuters.com/markets/currencies/chinas-central-bank-says-promote-digital-yuan-multi-polar-currencysystem- 2025-06-18/.