Embedded Files
Helpful prior knowledge and learning objectives
Helpful prior knowledge and learning objectives
Helpful prior learning:
Section 1.1.1 The economy and you, which explains what an economy is and how it is relevant to students’ lives
Section 1.1.2 The embedded economy, which explains the relationship between the economy and society and Earth’s systems
Section 5.1.3 State functions, which explains the various roles of the state in providing goods and services, protecting the population, and stabilising and guiding change
Section 6.1.1 Money systems, which describes the parts, relationships and functions of money systems
Section 6.1.3 Modern money creation, which explains how forms of money are created in modern money systems
Section 6.2.1 What is finance?, which defines finance and describes the main tools of finance
Section 6.2.2 Purpose of finance, which distinguishes between regenerative and extractive finance, and between values and financial valuation; and discusses the extent to which profit-oriented finance can support regeneration
Section 6.2.3 Financial power and inequality, which defines financial power and identify key actors and factors that influence where money flows
Section 6.2.5 Financialisation, which discusses how financialisation impacts everyday life and is a barrier to regenerative economies
Section 6.3.1 Why redesign money and finance?, which addresses the questions of who has access to finance, what goals are being financed and what rules shape financing
Section S.1 What are systems?, which explains what a system is, the importance of systems boundaries, the difference between open and closed systems and the importance of systems thinking
Section S.2 Systems thinking patterns, which outlines the core components of systems thinking: distinctions (thing/other), systems (part/whole), relationships (action/reaction), and perspectives (point/view)
Learning objectives:
discuss the functions and potential risks of a central bank digital currency (CBDC)
In China, a new kind of money is quietly being tested and expanded. It’s called the digital yuan, or e-CNY. You can use it to ride the subway in Beijing, pay at select shops, or receive government payments directly into a smartphone wallet. By 2025, it has been rolled out in 29 cities, with more than 180 million wallets created and over 7 trillion yuan in reported transactions.
But something feels different. Unlike cash, the e-CNY is created and issued directly by China’s central bank. You need a mobile phone number, often linked to your identity, to sign up. Some e-CNY payments have even been designed to expire if not used quickly.
The digital yuan is part of a wider trend. Across the world, central banks are exploring their own versions of Central Bank Digital Currencies (CBDCs). Some hope they can support financial inclusion, improve public services, or help respond to crises. Others fear they could lead to surveillance or even replace cash entirely, which could restrict freedoms because cash leaves no digital footprint.
As with all money systems, the key question is: what is it designed to do and for whom?
Figure 1. A sign in a store that accepts e-CNY
(Credit: 30000lightyears, CC BY-SA 4.0)
What is a central bank digital currency?
What is a central bank digital currency?
A central bank digital currency (CBDC) is a new form of national currency that some countries are considering. Like coins and notes, it is issued by a country’s central bank or in the case of the Eurozone countries, by the European Central Bank. But unlike cash, it would exist only in digital form, stored on a phone or computer, and often linked to an official identification.
CBDCs are not the same as cryptocurrencies like Bitcoin. Cryptocurrencies are created privately, often outside government control. CBDCs, by contrast, are public money, created by the state and usually designed to be stable, simple, and safe. Most are not interest-bearing, meaning they work more like digital cash than savings accounts.
There are two main types of CBDCs. Retail CBDCs are for ordinary people and businesses. These could be used to pay for groceries, receive social benefits, or transfer money without needing a commercial bank. Wholesale CBDCs are already used to move money between banks or large institutions.
Some countries such as China, Nigeria, and the Bahamas have already launched retail CBDCs. Others, like the European Central Bank and the Bank of England, are still researching or testing. According to the IMF and other global surveys, CBDCs are receiving widespread interest. Over 50 countries have approached the IMF for capacity development support on CBDCs. Meanwhile, global trackers show that more than 130 countries or currency unions (representing around 98% of global GDP) are exploring a CBDC in some form.
While each country designs its own system, they all face a common question: how might we use digital public money to serve people and the planet?
Figure 2. SandDollar is the digital version of the Bahamian dollar (B$). The Bahamas was the first country to issue a CBDC.
(Credit: SandDollar)
Why are governments exploring CBDCs?
Why are governments exploring CBDCs?
Money is part of a nation’s basic social infrastructure. When it remains in public hands, it can serve public goals and strengthen resilience. Yet as cash use declines, digital payments are increasingly dominated by private firms such as Apple Pay, WeChat Pay, and Visa. This shift concentrates power over how money moves and risks leaving public authorities dependent on private systems that prioritise profit.
Central bank digital currencies (CBDCs) offer states a way to keep public money useful and democratic in a digital age. Like cash, a CBDC would be issued by the central bank and backed by the state, but it would exist only in digital form. Its design could help ensure that digital payments remain a public service rather than a private monopoly.
Governments are exploring CBDCs for several reasons that often connect with regenerative goals of fairness, inclusion, and stability:
Protecting monetary sovereignty: A CBDC gives states a public option for payments, reducing dependence on private or foreign systems that can limit national control.
Improving financial inclusion: People without bank accounts could use a CBDC through a phone or card. Public payments such as benefits or emergency aid can already be transferred through banks, but a CBDC could make such support faster and more direct.
Strengthening state capacity and transparency: Moving funds through a shared public system can reduce losses, make spending easier to track, and build trust in public finance.
Enhancing economic stability: Programmable features could allow time-limited or purpose-specific payments, such as subsidies for renewable energy or emergency aid.
Encouraging public debate and democracy: CBDC initiatives invite societies to rethink who controls money and for what purpose. That debate itself can help align financial systems with the wellbeing of people and planet.
Figure 3. Financial inclusion is one of the most important goals of central bank digital currencies.
(Credit: Noun Project, various artists)
What are the risks and concerns?
What are the risks and concerns?
While CBDCs open new possibilities, they also pose risks. Poor design, or goals of state power and control could harm the very people and systems they aim to help.
Surveillance and privacy: Unlike cash, most CBDCs are linked to personal data. In China, for example, using the e-CNY requires a mobile number tied to an ID. This raises concerns about who can see transactions, how data is stored, and whether it could be used to monitor or punish citizens.
Centralised control: CBDCs could give governments or central banks the power to limit spending, freeze accounts, or make money expire. Some controls may serve public goals, but in less democratic contexts they could enable domination or exclusion.
Digital barriers: If CBDCs replace cash, people without smartphones, internet access, or digital skills could be locked out. To remain inclusive, public money must work on simple, offline, or shared devices.
Harm to local systems: Community currencies and cooperative finance can strengthen local resilience (Section 6.3.4). A dominant CBDC could crowd out these smaller systems if it becomes mandatory or is introduced without local consultation.
These risks are not reasons to reject CBDCs, but they show why design and governance matter. CBDCS can strengthen democracy and regeneration, but they can also deepen inequality and control depending on the values and goals the drive the design.
6.3.7 Activity
6.3.7 Activity
Concept: Systems, regeneration
Skills: Thinking skills (transfer, critical thinking)
Time: varies, depending on the option
Type: Individual, pairs, and group
Option 1: Designing a central bank digital currency
Time: 40 minutes
In small groups, imagine that your country is planning to launch a Central Bank Digital Currency (CBDC).
Decide on its main goals, for example: financial inclusion, ecological regeneration, or national resilience.
Make five key design choices for your CBDC. Think about:
Will it exist alongside cash or replace it?
How will privacy be protected?
Who will have access and what technology will they need?
Can the money be programmed for certain purposes?
How will it support people and the planet?
What risks would you still need to watch out for?
Draw or outline your system using a simple diagram or short presentation and share with your class.
Option 2: Community discussion circle
Time: 40 minutes
Note: Students should have already read the text of Section 6.3.7 on central bank digital currencies and been asked to identify a benefit and a risk that stand out to them, as well as a core value that they think should guide the design of CBDCs.
In this activity, you will explore different perspectives on central bank digital currencies (CBDCs) and consider how design choices reflect values such as fairness, privacy, and inclusion.
Arrange the class in a circle so everyone can see one another. The teacher or a student volunteer states the guiding question:
What kind of digital money would best serve people and the planet?Each student takes a turn to speak briefly, beginning with one or more of the following prompts. Someone should write the ideas where all can see.
A benefit I see in a CBDC is…
A concern I have is…
A value that should guide the design is…
After everyone has shared once, open a second round of discussion. Encourage students to build on or connect ideas. The group may begin identifying shared principles for how a regenerative CBDC could be designed.
Conclude with a short reflection, written or spoken:
What did you learn from hearing others’ views? Has your own perspective changed?
Ideas for longer activities and projects are listed in Subtopic 6.5
Checking for understanding
Checking for understanding
Coming soon!
Further exploration
Further exploration
Central bank digital currencies explained - a short video interview with Vicky van Eyck of Positive Money about what CBDCs are and why they are useful. Focuses on the digital euro, but the explanations are useful for central bank digital currencies generally. Difficulty level: easy
The Bahamas: The World’s First Digital Currency - a short video from the International Monetary Fund about the world’s first central bank digital currency in The Bahamas. Difficulty level: easy
A digital euro for the people - a position paper from Positive Money explaining the uses of a digital euro and how it should be designed to benefit people. Difficulty level: medium
Sources
Sources
Atlantic Council. (2025, July). Central Bank Digital Currency Tracker. https://www.atlanticcouncil.org/cbdctracker/?utm_source=chatgpt.com
Dalla Costa, A., Dissaux, T., Simic, A., van der Linden, M. J., & Van Eyck, V. (2023). A digital euro for the people [Position paper]. Positive Money Europe. https://www.positivemoney.eu/wp-content/uploads/2023/06/A-digital-euro-for-the-people_web.pdf
Dionysopoulos, L., Marra, M., & Urquhart, A. (2024). Central bank digital currencies: A critical review. International Review of Financial Analysis, 91, 103031. https://doi.org/10.1016/j.irfa.2023.103031
Egerer, E. (2024). Der öffentliche digitale Euro im historischen Kontext. Vierteljahreshefte zur Arbeits- und Wirtschaftsforschung (VAW), 1(3), 377–402. https://doi.org/10.3790/vaw.2024.1452505
International Monetary Fund. (2024, October 10). Central bank digital currency: Progress and further considerations (IMF Policy Paper No. PPEA2024/052). International Monetary Fund. https://www.imf.org/en/Publications/Policy-Papers/Issues/2024/11/08/Central-Bank-Digital-Currency-Progress-And-Further-Considerations-557194
Terminology
Terminology
Coming soon!
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