Stablecoins, tokenised deposits and CBDCs: how they differ

A stablecoin, a tokenised deposit and a central bank digital currency can all be denominated in the same currency while giving their holders different claims. To distinguish them, identify who owes the money and the terms on which the holder can use or exchange it.

The ledger is a separate choice. A blockchain can record several kinds of money, and a central bank digital currency does not have to use a public blockchain.

A stablecoin targets a reference value

For a fiat-backed stablecoin, a private issuer arranges reserves and redemption to support a target such as one US dollar. The holder's rights depend on the product documents and applicable law. Holding the token does not automatically mean owning a proportional slice of every reserve asset.

Access matters alongside backing. Circle's USDC terms make direct redemption conditional on eligibility and account arrangements. Someone holding USDC through a retail exchange may rely on that exchange to convert it into bank money. Other stablecoins have different structures, including mechanisms that do not rely on a conventional fiat reserve.

Our guide to stablecoin payments follows the conversion stages. The token's target price and the amount a particular customer receives after fees are separate facts.

A tokenised deposit remains a bank liability

A tokenised deposit represents commercial bank deposit money on a programmable ledger. The bank remains the debtor. Tokenisation changes how the deposit can be recorded or used; it does not turn the balance into central bank money.

The BIS analysis of stablecoins and tokenised deposits describes a model in which transfers between banks settle in central bank money, helping preserve exchange at par. That model should not be assumed for every product carrying the tokenised-deposit label.

Check which bank issues the deposit, who can hold it, how transfers between banks work and whether the recipient receives a claim on the same bank or another one. Deposit protection, where available, depends on the jurisdiction, depositor eligibility, product classification and statutory limits. A token format alone establishes none of those conditions.

A CBDC is a direct central bank liability

The BIS definition of CBDCs distinguishes retail money intended for public use from wholesale arrangements for eligible financial institutions. A wholesale settlement experiment is therefore different from a digital wallet available to every resident.

Central bank issuance changes the credit relationship. It does not remove operational, fraud, privacy or access questions. Distribution can involve private wallet providers, and choices about interest, holding limits and offline payments depend on the particular design.

The Bank of England's digital pound information describes an exploration of possible issuance rather than an existing retail product. A proposal, a pilot and a live currency need to be identified separately. Neither the digital pound's proposed features nor another jurisdiction's rules define all CBDCs.

Compare the same payment obligation

Imagine a business paying a £1,000 invoice using three hypothetical sterling products. A stablecoin route requires checking the issuer's redemption promise and the supplier's conversion route. A tokenised deposit requires checking the issuing bank and transfer arrangements. A retail CBDC, where actually available, requires checking eligibility and the wallet service through which the supplier receives it.

In each case, establish when the invoice is legally discharged and when the supplier can use the funds. The decisive distinction is the chain of claims and obligations, followed by the practical route to payment.

Sources

• Circle: USDC terms
• BIS Bulletin 73: Stablecoins versus tokenised deposits
• BIS: Central bank digital currencies
• Bank of England: The digital pound