Central Bank Digital Currencies (CBDCs) are rapidly expanding in 2025, with over 134 countries—representing 98% of global GDP—exploring or implementing them, a significant rise from just 35 in 2020. As of May 2025, 11 countries have fully launched CBDCs, 44 are running pilots, and the rest are in research phases. This surge reflects a global push to modernize financial systems, enhance inclusion, and maintain monetary control amidst the rise of cryptocurrencies. This article examines the expansion of CBDCs, their drivers, applications, and the challenges they pose in 2025.

Global Adoption and Progress

The expansion of CBDCs has gained momentum, with every G20 country now involved. Countries like Brazil, India, Japan, and Russia are in advanced pilot stages, while the Bahamas, Jamaica, and Nigeria have fully launched retail CBDCs, focusing on domestic growth. The European Central Bank (ECB) is preparing for a digital euro, targeting a launch by October 2025, and the U.S. is exploring wholesale CBDCs through Project Agorá alongside six other major central banks. Cross-border initiatives, such as Project mBridge connecting China, Thailand, the UAE, Hong Kong, and Saudi Arabia, have doubled since 2022, aiming to streamline international payments.

Driving Forces Behind CBDC Expansion

Several factors fuel this global trend. First, CBDCs enhance financial inclusion by providing digital payment access to unbanked populations—over 600 million people with mobile phones but no bank accounts could benefit, according to the World Economic Forum. Second, they reduce cross-border transaction costs and delays, which currently average 6.25% fees and take days to settle, per the World Bank. Third, central banks aim to counter the rise of cryptocurrencies and stablecoins, maintaining monetary sovereignty. For instance, China’s e-CNY was a response to Alipay and WeChat Pay dominance. Finally, CBDCs improve transparency, helping combat money laundering and illicit financing, though this traceability raises privacy concerns. CBDCs also compete with AI applications in cryptocurrency, which optimize blockchain transactions.

Applications and Benefits

CBDCs come in two forms: retail, for public use, and wholesale, for interbank settlements. Retail CBDCs, like Nigeria’s eNaira, enable direct digital payments, often intermediated through banks or digital wallets, fostering financial inclusion. Wholesale CBDCs, such as those tested in Project Agorá, streamline cross-border payments and securities settlements, reducing reliance on systems like SWIFT. The IMF notes that CBDCs can replicate cash’s accessibility, offering low-cost, real-time transactions without intermediaries, thus lowering risks for merchants and simplifying payment processes.

CBDC expansion in 2025 is depicted by a globe with interconnected nodes, glowing digital coins, and a central bank, symbolizing global financial trends.

Challenges and Privacy Concerns

Despite their promise, CBDC expansion faces significant hurdles. Privacy is a major concern—posts on X highlight fears that CBDCs, with features like biometric ID, geofencing, and expiry dates, could become tools for surveillance and control, not just “digital cash.” The ECB’s 2020 consultation confirmed privacy as a top priority for citizens, yet concentrated data in central banks risks cyberattacks and systemic surveillance if breached. Additionally, CBDCs could disrupt commercial banks by reducing deposits, potentially triggering bank runs, as warned by the Atlantic Council. The energy demands of CBDC infrastructure also clash with sustainability goals, a point often glossed over in the rush to adopt.

A Critical Perspective

The narrative around CBDC expansion often paints them as a financial panacea, but this oversimplifies the reality. While they promise inclusion and efficiency, the focus on technology ignores systemic issues like digital literacy gaps and unequal access to infrastructure—electricity and networks remain barriers for remote populations. The narrative also downplays the risk of centralized control; governments could use CBDCs to monitor and restrict spending, as some X users fear, potentially stifling freedom. Moreover, the enthusiasm for cross-border efficiency ignores geopolitical tensions—competing CBDC systems may fragment global finance rather than unify it, especially if major economies like the U.S. lag behind China.

The Future of CBDCs

The expansion of CBDCs in 2025 signals a transformative shift in global finance, with projections estimating 7.8 billion transactions by 2031, a 2,430% increase from 2024. Yet, their success hinges on balancing innovation with privacy, security, and inclusivity. Central banks must address these challenges to ensure CBDCs fulfill their potential without compromising individual rights or financial stability.