It feels like we’ve been talking about CBDCs for a long time now, ever since Rik first wrote about the e-krona project in an article back in 2018, and yet they still remain a hotly debated topic, with only three retail CBDCs fully live and in general circulation for everyday use at the time of writing this article, according to the Atlantic Council CBDC tracker.

At The Banking Scene Conference Brussels, a panel of experts took the stage to explore the evolving impact of Central Bank Digital Currencies (CBDCs) on both wholesale and retail payment landscapes. Moderated by Bernard Nicolay, Adjunct Professor at Solvay Brussels School of Economics and Management, the session offered insights from Daniel McLean (European Central Bank), Douglas Lockhart (European Savings and Retail Banking Group), Nick Ashton (HSBC), and Tamara Ferreira Schmidt (Digital Euro Association).

As CBDCs move from theory to reality, particularly in Europe, the session provided an opportunity to reflect on where the region stands today, what lies ahead, and the major implications for banks and society.

The European CBDC Landscape: Where Are We Now?

Europe is uniquely positioned in the global race for CBDC development, thanks in part to its dual-track strategy for both wholesale and retail applications.

Wholesale CBDCs, targeted at institutional transactions like interbank settlement, already have functioning equivalents in Europe. As Daniel McLean from the ECB explained, “We’ve had wholesale CBDCs for many, many years. In the UK, it’s CHAPS; in the euro area, it is TARGET2. What’s underway now is the next generation: how we can make wholesale better, stronger, and more resilient for the future”.

These new iterations, he added, will be built to support emerging technologies like distributed ledger technology (DLT) and tokenisation. In doing so, they aim to solve longstanding inefficiencies in cross-border payments and liquidity management, areas where innovation has lagged behind technological capability.

On the retail side, however, Europe stands at a more nascent, though critical, stage. The ECB is currently navigating a legislative process to determine whether the Digital Euro will be implemented at all. If adopted, it would serve as a digital complement to cash, helping to future-proof the Euro and ensure citizens maintain access to public money even as digital payments dominate.

Tamara noted that retail CBDCs are “much more political” because they “touch people’s everyday lives.” They demand answers not just about efficiency, but also about trust, access, and privacy.

Opportunities: Speed, Transparency, Inclusion

A consistent theme throughout the panel was that CBDCs, whether wholesale or retail, offer clear opportunities for modernising payments infrastructure.

On the wholesale side, Nick Ashton of HSBC emphasised the potential for “better, faster, more transparent” systems, particularly in the context of cross-border liquidity and corporate treasury. “What we’ve got today is robust but outdated. There's a massive opportunity for improvement,” he said. “We can enable 24/7 global liquidity solutions in a safe and secure way”.

From a central banking perspective, Daniel agreed: “There’s no excuse anymore. We can send encrypted messages globally in seconds, yet payments can still take days. It’s time to modernise.” But he added a caveat: “These are often political problems, not technological ones”.

Retail CBDCs, meanwhile, open doors to financial inclusion and payment sovereignty. According to him, the ECB believes in preserving access to public money in a digital form: “We know cash is declining. Even if you prefer to pay digitally, you should still be able to use public money”.

In regions where private payment solutions dominate, even for local transactions, a digital Euro can offer a sovereign alternative, helping Europe assert its independence in the payments domain.

Challenges: Trust, Privacy, Coexistence

Despite their promise, CBDCs are not without obstacles. The panellists were candid about the challenges they face, from technical interoperability to public trust.

Privacy, in particular, emerged as a linchpin for public acceptance. “There is a strong cultural expectation in Europe for digital money that feels like cash,” Tamara explained. “Offline capability and tiered anonymity are not just technical features; they symbolically tell people they are still in control”.

Daniel acknowledged that privacy is being addressed head-on in the digital Euro design. Online payments, by necessity, will require some level of data processing, but the ECB itself will not see transaction data. Offline payments, however, will allow peer-to-peer transfers without intermediaries, mimicking the privacy of cash, but at the cost of recoverability. “If you lose your phone, it's like losing your wallet. Your money is gone,” he warned.

The coexistence of CBDCs with existing financial instruments was also addressed. Douglas Lockhart highlighted that central and commercial bank money have always coexisted: “It’s just about tipping the seesaw back into balance. Public money needs to feel secure in the future”.

The retail banks represented by ESBG are particularly concerned with the costs of maintaining multiple payment systems: cash, digital euro (online and offline), and existing private solutions. “Cash services are expensive, but they’ve been part of the social contract,” he noted. “Adding another channel like offline digital euro could strain that system further”.

Nick took a pragmatic view: “We've always adapted. We did it with cash, and we’ll do it with digital cash. It’s part of the job”.

The Path Forward: Designing for Trust and Value

Design, usability, and clarity are pivotal for retail CBDC adoption. Tamara stressed that “usability isn’t just a nice interface. It’s about making sure public money feels safe and familiar”.

Daniel underscored the ambition: “We must deliver a best-in-class product that meets or exceeds what’s in the market today. Right now, that standard is not European, it’s Big Tech. We need to change that”.

This is especially difficult in a continent with 20+ payment cultures. “In some countries, QR codes are king. In others, it’s NFC. Building a product that works everywhere without watering it down is our daily challenge,” he said.

Five Years from Now: What Success Looks Like

As the session drew to a close, the panellists were asked to project five years into the future: what would a successful CBDC implementation look like?

Douglas Lockhart envisioned a world where private sector-led innovation continues, but is complemented by a legal digital tender that’s available when needed. “Let the market lead on standards, but have the ECB ready with legal tender when the moment is right”.

For Daniel McLean, success means a simple thing: “That we launched. That we provided another choice. That every European, no matter where they are, has a means and a mechanism to pay”.

Nick Ashton emphasised tangible value: “We must deliver an improvement clients can feel. If we go through all this and end up with what we already have, then the question is: so what?”.

Finally, Tamara Schmidt stressed voluntary adoption as the true litmus test. “It shouldn’t be mandated or embedded by default. It should be trusted, useful, and responsive to people’s lives”.

Conclusion: A Balancing Act of Innovation and Inclusion

The transition from wholesale to retail CBDCs is more than a technical evolution; it’s a cultural and political journey. Europe finds itself in a delicate balancing act: innovating without alienating, harmonising without homogenising, and modernising without marginalising.

As Bernard Nicolay concluded, success will require “curiosity, open-mindedness, and collaboration between politicians, central bankers, commercial banks, civil society, and academia”.

CBDCs offer Europe the chance to redefine the future of payments. Whether that future becomes reality will depend not just on code and legislation, but on trust, inclusivity, and shared vision.

Will CBDCs be part of everyday payments by 2030? Join us at The Banking Scene BBQ Night on September 16 in Brussels, where we will explore "Payments in 2030", delving into the innovations, regulations and customer expectations that will shape the payments landscape in the thirties and beyond. Secure your seat here today!