Digital Money: Three Forms, One Future
The future of money is not about which digital currency will win out, but rather how different forms of digital money can coexist and complement each other. According to a recent report from the Bank for International Settlements (BIS), trust in money depends on institutional properties such as singleness, elasticity, and financial integrity, rather than just whether a claim is recorded on a blockchain.
Three main contenders have emerged: tokenised bank deposits, central bank digital currencies (CBDCs), and stablecoins. Tokenised bank deposits are commercial-bank liabilities recorded on permissioned ledgers, which remain inside the existing prudential system and deposit-insurance arrangements. They offer programmable features such as conditional transfers, atomic settlement of assets and cash, and integrated payment, collateral, and treasury workflows.
CBDCs extend central-bank money into a digital form, giving households and businesses access to public money that functions like electronic cash. In wholesale form, it means making central-bank settlement money compatible with tokenised securities and programmable markets. The attraction is that the settlement asset carries no private issuer credit risk and preserves the public monetary anchor.
Stablecoins are money-like tokens designed to circulate natively across digital networks. Their greatest strategic advantage has been distribution, allowing a dollar stablecoin to move freely across public blockchain infrastructure, plug into exchanges and smart contracts, and cross borders without requiring the recipient to hold an account at the issuer.