Wholesale CBDC
A wholesale CBDC is central bank digital money designed for use by banks and other financial institutions, not the general public.
A wholesale CBDC is a digital form of central bank money intended for transactions between financial institutions, such as commercial banks, payment providers, and market infrastructure operators. Unlike a retail CBDC, which would be used by individuals and businesses for everyday payments, a wholesale CBDC is mainly for large-value settlement, interbank transfers, and financial market operations. It represents a direct claim on the central bank, similar in role to reserves held by banks today, but potentially using newer digital ledger or token-based systems.
It matters because wholesale CBDCs could make settlement faster, more transparent, and available across longer operating hours, especially for cross-border payments or securities transactions. For example, instead of two banks settling a bond trade through several intermediaries over one or more days, a wholesale CBDC system could allow the cash leg and the asset leg to settle at nearly the same time, reducing counterparty and operational risk. It is best understood as infrastructure for the financial system rather than a consumer payment app or a cryptocurrency.
Other terms in CBDCs
CBDC
A central bank digital currency is digital money issued by a country’s central bank and designed to function as official legal tender.
Digital Euro
A digital euro is a proposed central bank digital currency that would let people and businesses use euro-area central bank money electronically.
Digital Yuan
China’s central bank digital currency, a digital form of the yuan issued by the People’s Bank of China for everyday payments.
Retail CBDC
A retail CBDC is digital central bank money designed for everyday use by the public, similar to digital cash.