CBDC and commercial banks are not heading toward a simple winner-takes-all fight. The realistic path is messier. Central banks will set new digital money rails, while banks keep many customer-facing roles but with thinner margins in deposits and payments. That is the part bank teams need to take seriously. If you want the broader design and policy background behind this shift, the Certified Central Bank Digital Currency (CBDC) Expert program is a reasonable place to start.

Central bank digital currencies, or CBDCs, are now a mainstream policy topic. The Atlantic Council CBDC tracker reports that more than 130 jurisdictions are exploring CBDCs, representing nearly all global GDP. The Bank for International Settlements, the European Central Bank, the IMF, and national central banks are all testing designs that could change how money moves between households, firms, banks, and the state.

Why CBDCs Matter to Commercial Banks

A CBDC is a digital form of central bank money. For retail users, it can look like a wallet balance. For banks and institutions, a wholesale CBDC can act as settlement money for interbank payments, securities transactions, or foreign exchange.

Commercial banks care because deposits are not just passive balances. They fund lending. They create customer data. They anchor payments, credit cards, cash management, and treasury products. If customers can hold risk-free digital central bank money in large amounts, the bank deposit model changes.

To be blunt, the key question is not whether CBDCs use blockchain. Some do, some do not. The real question is who controls the ledger, who owns the customer relationship, and whether CBDC balances pay interest.

The Global CBDC Picture

Since so much of this landscape now overlaps with tokenized deposits and stablecoins competing for the same balances, it is worth pairing this reading with a Certified Digital Assets Expert credential to cover that adjacent ground.

CBDC work has moved well beyond small pilots. China's e-CNY remains the largest live retail CBDC project, with hundreds of millions of users reported across its extended pilot. The Bahamas Sand Dollar, Jamaica's Jam-Dex, and Nigeria's eNaira are live in smaller economies, though adoption has depended heavily on practical use cases such as merchant acceptance and bill payment.

Major economies are also active, but their routes differ:

Euro area: The digital euro project completed its investigation phase and moved into preparation work, with an intermediated model favored by the ECB.
United Kingdom: The digital pound is still in design and consultation work, with privacy, wallet access, and holding limits receiving close attention.
India: The digital rupee has been tested in retail and wholesale settings, supported by regulated banks.
China: The e-CNY continues to expand through banks, apps, transport systems, and merchant networks.
United States: Federal retail CBDC issuance remains politically constrained, while dollar stablecoin regulation has taken priority.

Cross-border work matters just as much. Project mBridge, involving central banks and monetary authorities from China, Hong Kong, Thailand, the UAE, and Saudi Arabia, tests multi-CBDC settlement for international payments. The BIS Innovation Hub's Nexus work focuses on linking instant payment systems. Project Agora studies tokenized central bank money and tokenized commercial bank deposits on shared infrastructure.

CBDC Design Models and Bank Impact

Direct CBDC

In a direct model, the central bank provides wallets or accounts to the public. This is the most disruptive option for commercial banks because the central bank becomes the direct provider of retail money services. It raises hard questions about customer service, onboarding, dispute handling, privacy, and bank funding.

Two-tier or intermediated CBDC

Most serious policy designs now lean toward a two-tier model. The central bank operates the core ledger and sets the rules. Commercial banks and licensed payment firms handle wallet distribution, KYC, AML checks, customer support, and app integration.

This model protects the role of banks in credit creation while still giving the public access to digital central bank money. It is the likely template for the digital euro and many other retail CBDC systems.

Wholesale CBDC

Wholesale CBDC is less threatening to bank deposits because financial institutions use it, not households. It can improve settlement for securities, interbank transfers, and foreign exchange. Banks may actually prefer this version because it modernizes back-office settlement without pulling retail balances away from deposit accounts.

Where CBDCs Compete With Banks

Deposit funding

The biggest competitive risk is deposit migration. If CBDC pays interest and has high holding limits, it can become a close substitute for bank deposits. During stress, customers could move funds from a commercial bank into CBDC with a few taps. That is a faster version of a bank run.

IMF and Bank of Canada research both point to caps, tiered remuneration, and non-interest CBDC designs as ways to reduce this risk. The Federal Reserve has also studied how interest-bearing CBDC could affect deposit rates, bank funding costs, and loan supply.

Payments revenue

Banks also face pressure in payments. A retail CBDC that supports instant, low-cost transfers can compete with card rails, account-to-account payment services, and bank-run payment products. In cross-border payments, multi-CBDC networks could reduce the need for long correspondent banking chains.

That does not mean banks disappear. It means a bank may earn less from payment friction and more from services around liquidity, compliance, foreign exchange, and credit.

Customer data

Everyday payments create valuable behavioral data. If CBDC wallets sit outside bank apps, banks lose part of that view. That weakens credit scoring, fraud monitoring, cash-flow analytics, and product targeting.

This is one reason banks are pushing to remain the front-end wallet providers. The wallet is not just a technical interface. It is the customer relationship.

Where CBDCs Create Collaboration

The strongest CBDC designs treat banks as operating partners. Central banks are good at issuing money and maintaining monetary trust. Banks are better at onboarding millions of customers, handling exceptions, monitoring suspicious activity, managing credit, and building user-facing services.

A practical detail from CBDC and tokenized payment workshops: the hard part is rarely the wallet screen. It is reconciliation. When a merchant refund occurs, should it reverse the original retail ledger entry or post a new return transaction with ISO 20022 return data such as pacs.004? That decision affects audit trails, dispute handling, tax records, and fraud models. Banks already live in those details.

Project Agora is a useful signal. It does not imagine CBDC replacing bank money. It studies how tokenized commercial bank deposits can interact with tokenized central bank money. That matters because most money used by businesses today is commercial bank money, not physical cash or central bank reserves.

New Business Models for Commercial Banks

1. Tokenized deposits

Tokenized deposits are bank deposit claims represented on programmable infrastructure. They can move like digital assets while remaining liabilities of regulated banks. In a CBDC environment, tokenized deposits could settle against wholesale CBDC or interact with retail CBDC wallets.

This is a better fit for banks than trying to imitate unregulated stablecoins. Banks already have balance sheets, compliance teams, and corporate relationships. Tokenized deposits let them bring those strengths into digital asset infrastructure.

2. Programmable treasury services

Programmable money allows conditional payments. Think automated escrow, delivery-versus-payment for securities, milestone-based supplier payments, or tax payment triggers. Banks can build treasury tools around these features for corporates.

For a manufacturer, the value is not the CBDC itself. The value is paying a supplier instantly when verified shipment data arrives, while keeping liquidity rules and credit lines under bank control.

3. Cross-border liquidity and FX services

Multi-CBDC platforms such as mBridge and Nexus could reduce correspondent banking fees, but they also create new service layers. Banks can provide FX quotes, intraday liquidity, hedging, sanctions screening, and reporting for corporate clients using multiple CBDCs.

The winners will not be banks that defend slow payment rails. The winners will be banks that make new rails usable for trade finance, payroll, marketplaces, and treasury operations. Building that kind of capability internally often means pairing product strategy with a general Tech Certification, since the underlying API, integration, and systems knowledge is what actually makes new rails usable for corporate clients.

4. Compliance and identity services

CBDCs increase the need for identity, privacy controls, wallet risk scoring, AML monitoring, and regulatory reporting. Banks can package these capabilities for fintechs, merchants, and public-sector CBDC programs.

This is not glamorous work. It is valuable work. Regulators trust banks because they have spent decades building controls around money movement.

Case Studies Worth Watching

China e-CNY: Shows the scale a retail CBDC can reach when integrated into major platforms, banks, transport, and retail payment flows.
Digital euro: A key test of the two-tier model, with banks expected to distribute wallets while the ECB manages core infrastructure.
Nigeria eNaira: Shows that launch alone does not guarantee adoption. Merchant integration and practical use cases matter.
Jamaica Jam-Dex: Utility bill payment support helped increase active users, proving that boring use cases often drive real adoption.
Project Agora: A serious experiment in making tokenized bank deposits and central bank money work together.

What Bank Teams Should Do Now

CBDC strategy should not sit only with policy or innovation teams. It touches treasury, payments, compliance, architecture, retail banking, corporate banking, and risk.

Start with four actions:

Model deposit sensitivity: Test what happens if 5 percent, 10 percent, or 20 percent of transactional deposits move into CBDC during normal periods and stress events.
Build tokenized deposit knowledge: Understand how tokenized commercial bank money differs from stablecoins, CBDC, and traditional deposits.
Upgrade ISO 20022 and API readiness: CBDC systems will not exist in isolation. They will connect to payment messages, reporting systems, and reconciliation tools.
Train teams beyond theory: Product, risk, and technology teams need a shared vocabulary for CBDC, digital assets, smart contracts, and programmable payments.

If you are building expertise in this area, look at Blockchain Council learning paths such as Certified Blockchain Expert™, Certified Blockchain Developer™, and Certified Cryptocurrency Expert™. For banking teams, pair CBDC study with digital asset risk, tokenization, and smart contract fundamentals.

The next useful step is simple. Map one existing bank product, such as merchant settlement or corporate cash management, onto a CBDC or tokenized deposit rail. You will quickly see where the margin shifts, where the compliance work grows, and where new fee-based services can be built. And since customer trust and adoption will decide how many of these new fee-based services actually stick, a Marketing Certification is worth adding to the mix for teams building the go-to-market side of CBDC-adjacent products.

FAQs

1. How will CBDCs affect commercial banks?

Central Bank Digital Currencies (CBDCs) could affect commercial banks by changing how customers make payments, hold transaction balances, and access digital financial services. Retail CBDCs may compete with bank deposits, while intermediated models could give banks important roles in wallet services, onboarding, compliance, and customer support. The overall impact depends heavily on CBDC design. Banks could lose some traditional revenue streams while gaining opportunities to build new services around digital public money.

2. Will CBDCs compete with commercial bank deposits?

Yes, particularly if consumers can hold substantial CBDC balances or if a CBDC offers attractive interest. Customers might move money from bank accounts into central bank digital money because of convenience or perceived safety. This could increase competition for deposits and raise bank funding costs. Holding limits, non-interest-bearing CBDCs, and tiered remuneration can reduce this risk by positioning CBDCs primarily as payment instruments rather than full replacements for savings accounts.

3. Will CBDCs replace commercial banks?

CBDCs are unlikely to replace commercial banks entirely. Banks perform functions far beyond providing transaction accounts, including lending, credit assessment, maturity transformation, wealth management, financial advice, and business financing. In many CBDC models, commercial banks could remain the customer-facing intermediaries responsible for wallets and compliance. The more plausible outcome is a change in banks' roles rather than their disappearance, which is less dramatic than the headlines but considerably more useful for planning.

4. How can commercial banks collaborate with central banks on CBDCs?

Commercial banks could provide CBDC wallets, customer onboarding, KYC verification, AML monitoring, fraud prevention, transaction services, and customer support. Central banks could operate the core monetary infrastructure while regulated institutions manage customer relationships. This public-private model allows central banks to provide digital sovereign money without building an enormous retail banking operation. Banks can contribute existing payment infrastructure, compliance capabilities, distribution networks, and knowledge of customer behavior.

5. What is an intermediated CBDC model?

An intermediated CBDC model separates the issuance of digital central bank money from customer-facing services. The central bank maintains responsibility for the CBDC, while commercial banks and authorized payment providers distribute wallets and manage users. Intermediaries may handle identity verification, transaction processing, compliance, fraud monitoring, and support. This model can preserve competition and reduce operational burdens on central banks while allowing users to hold a form of central bank money.

6. How could CBDCs affect bank profitability?

CBDCs could pressure bank profitability if they reduce low-cost deposits, payment fees, or other transaction-related revenue. Banks may also face expenses for technology upgrades, cybersecurity, compliance, and integration. However, CBDCs could lower reconciliation and settlement costs while creating revenue opportunities around wallets, treasury services, digital identity, analytics, and programmable payments. Profitability effects will therefore vary according to business model, market structure, and CBDC architecture.

7. How could CBDCs change banks' payment businesses?

CBDCs could reduce reliance on traditional payment chains by enabling faster settlement in digital central bank money. Banks may need to compete more heavily on customer experience, value-added services, security, and integration rather than simply controlling access to payment infrastructure. They could develop CBDC-enabled merchant services, cross-border solutions, treasury platforms, and automated payment products. Payment revenue may shift rather than vanish, because finance rarely allows a fee pool to disappear without someone inventing another service around it.

8. What new business models can banks develop around CBDCs?

Banks could develop CBDC wallets, merchant acceptance services, programmable payment solutions, digital identity services, custody, compliance-as-a-service, cross-border payment platforms, and treasury-management products. They might also integrate CBDCs into enterprise resource planning and accounting systems. Wholesale CBDCs could create opportunities around tokenized securities and institutional settlement. Successful banks would likely focus on services surrounding digital money rather than attempting to charge customers merely for access to the currency itself.

9. Can banks earn revenue from CBDC wallet services?

Potentially. The underlying CBDC may be public money, but banks could provide value-added services such as premium wallets, business payment tools, fraud protection, transaction analytics, merchant services, and enterprise integrations. Revenue models would depend on regulations governing fees and access. Policymakers may want basic CBDC services to remain affordable, so banks may need to generate revenue from additional functionality rather than imposing substantial charges on ordinary transactions.

10. How could CBDCs affect bank lending?

If significant deposits move from banks into CBDCs, banks may need alternative funding to support lending. Wholesale borrowing, bond issuance, or central bank facilities may be more expensive than stable retail deposits, potentially affecting loan pricing and availability. However, carefully designed holding limits and remuneration policies can reduce deposit migration. Banks may also benefit indirectly if faster CBDC payments improve borrowers' cash flows and financial information.

11. How could CBDCs create opportunities for digital identity services?

Banks already perform extensive identity verification and could become important providers or validators of digital credentials within CBDC ecosystems. Customers might use reusable verified credentials for wallet onboarding, payments, or other financial services. Privacy-preserving technologies could allow users to disclose only necessary attributes. Digital identity could therefore become a valuable infrastructure service for banks, although collecting every available piece of customer information and calling it innovation would rather miss the privacy-preserving part.

12. How could commercial banks use programmable CBDC payments?

Banks could develop automated payment services that execute when predefined business conditions are satisfied. Companies might automatically pay suppliers after invoice approval or confirmed delivery, while treasury departments could automate recurring settlements. Banks could provide smart-contract integration, controls, reporting, and compliance around these workflows. Importantly, programmable payments can often provide automation without making the underlying CBDC itself programmable or imposing restrictions on how recipients subsequently use their money.

13. How could CBDCs change corporate banking and treasury services?

CBDCs could enable faster cash concentration, real-time settlement, automated reconciliation, and improved visibility over corporate liquidity. Banks could integrate CBDC transactions with treasury-management systems, ERP platforms, invoices, and supply-chain workflows. Cross-border CBDCs could eventually support faster international treasury operations. Corporate banks may therefore move toward real-time liquidity and transaction-management services, helping clients optimize cash rather than merely processing payments after the underlying business event has already occurred.

14. How can CBDCs create opportunities in cross-border banking?

Interoperable CBDCs could allow banks to develop faster cross-border payment, foreign-exchange, trade-finance, and treasury services. Banks may provide liquidity, compliance, currency conversion, and customer interfaces connecting different CBDC networks. While some correspondent banking functions could become less important, new roles may emerge around interoperability and regulatory coordination. International banking is unlikely to become intermediary-free merely because the underlying money learned how to travel through a newer database.

15. How could wholesale CBDCs affect investment banks?

Wholesale CBDCs could provide digital central bank money for settling securities and other institutional transactions. Investment banks might use them for delivery-versus-payment, tokenized bonds, collateral management, foreign-exchange settlement, and other capital-market activities. Atomic settlement could reduce certain counterparty and reconciliation risks. Banks could develop services around tokenization, custody, liquidity, market making, and digital asset infrastructure as traditional and tokenized financial markets increasingly interact.

16. Could CBDCs increase competition between banks and fintech companies?

Yes. If central banks provide common CBDC infrastructure, banks and fintech companies may compete to offer the best wallets, merchant services, payment interfaces, and financial applications. This could reduce some advantages historically associated with controlling payment rails. Banks retain strengths in regulation, trust, compliance, and existing customer relationships, while fintech firms may move faster in product development. Open and interoperable access could therefore increase competition around the services built on top of CBDCs.

17. What technology investments will commercial banks need for CBDCs?

Banks may need to invest in wallet platforms, APIs, real-time processing, cybersecurity, digital identity, fraud analytics, data governance, cloud or distributed infrastructure, and integration with existing core banking systems. They may also need new operational processes for CBDC settlement, liquidity management, compliance, and customer support. Legacy-system integration could be particularly difficult. The central bank may modernize the currency rather faster than a bank can persuade a forty-year-old core system to acknowledge its existence.

18. What risks do CBDCs create for commercial banks?

Major risks include deposit migration, higher funding costs, reduced payment revenue, accelerated bank runs, technology investment requirements, cybersecurity exposure, and increased competition from fintech providers. Banks may also face operational and compliance risks when integrating CBDCs with existing systems. At the same time, avoiding CBDC participation could create strategic risk if customers migrate toward institutions offering better digital services. Banks therefore need to assess both disruption risks and opportunities.

19. How should commercial banks prepare for CBDC adoption?

Banks should evaluate potential deposit impacts, identify customer use cases, modernize payment infrastructure, strengthen APIs and cybersecurity, and develop CBDC integration strategies. They should also examine opportunities in wallets, digital identity, programmable payments, corporate treasury, cross-border settlement, and tokenized assets. Scenario planning should cover different CBDC architectures because the commercial impact of a payment-focused retail CBDC differs substantially from an interest-bearing CBDC or wholesale settlement platform.

20. What is the future of commercial banking in a CBDC economy?

Commercial banks are likely to remain important but may increasingly compete on credit, customer experience, technology, data security, advisory services, and value-added payment capabilities. CBDCs could move part of the monetary infrastructure closer to central banks while leaving distribution and financial services to private institutions. The strongest banking models will treat CBDCs neither as an existential threat nor as automatic salvation. They will adapt by building useful services around digital central bank money while protecting funding, liquidity, customer trust, and lending capabilities.