Mastercard’s Raj Dhamodharan predicts that more central banks will shift away from retail CBDCs, focusing instead on wholesale digital currencies for financial institutions in 2025.

Central banks are rethinking their approach to state-backed digital currencies, with Raj Dhamodharan, Mastercard‘s head of crypto & blockchain, noting that while many once considered issuing their own digital currencies to keep pace with the private sector, the focus is now shifting.

In a Feb. 6 blog post, Dhamodharan forecasted that in the near future central banks will stop prioritizing digital currencies for the general public.

“Today, more and more central banks have concluded that the private sector is innovating well on its own and that central bank digital currencies aimed at the general public needn’t be a high priority.”

Raj Dhamodharan

Instead, Dhamodharan expects more central banks to focus on “wholesale” central bank digital currencies, which are intended for use by financial institutions, not the general public. He believes the shift will help boost settlement capabilities and speed up cross-border capital flows.

“These CBDCs could fundamentally increase institutional settlement capabilities and enable the faster movement of capital across jurisdictions.”

Raj Dhamodharan

In 2025, Dhamodharan believes the trend will continue, with central banks leaning more towards wholesale CBDCs while leaving retail projects aside. In June 2024, a survey by the Bank for International Settlements revealed that a vast majority of central banks worldwide are steering away from issuing retail versions of CBDCs in the medium term, with only 12% of respondents expressing plans to do so.

According to the survey results, the likelihood that a wholesale CBDC will be issued within the next six years is now “greater than that for retail,” BIS says, adding that there could be nine wholesale CBDCs “publicly circulating towards the end of this decade.”