Crypto glossary
Wholesale vs retail CBDC
A wholesale CBDC is central bank digital money used only by banks to settle large payments, while a retail CBDC is designed for everyday use by the public.
Central banks already issue digital money to commercial banks in the form of reserve accounts. A wholesale CBDC puts that money on a new kind of ledger, often based on distributed ledger technology, so banks and other financial institutions can settle interbank transfers, securities trades and foreign exchange deals with programmability and atomic settlement. A retail CBDC, by contrast, would be held directly by households and businesses, like digital cash.
Wholesale projects are more advanced. The BIS and several central banks tested cross-border settlement in mBridge, Project Agorá is exploring tokenised correspondent banking and the Eurosystem plans to link DLT platforms to central bank money. On the retail side, China's e-CNY is the largest pilot and the ECB is preparing the digital euro.
The two raise very different questions. Wholesale CBDCs mostly concern efficiency, interoperability and legal finality between institutions. Retail CBDCs touch privacy, the risk of deposits draining from banks, holding limits and the role of the state in everyday payments, which makes them far more politically contested.
Example
Two banks swap a tokenised bond for wholesale central bank money on a shared ledger, and both legs settle in the same instant instead of two days later.