Debates on central bank digital currency (CBDC) have entered a more mature phase. The key question today is no longer whether central banks should engage with digital public money, but how to introduce innovation in settlement and market infrastructure without undermining financial stability or institutional credibility. In this context, global discussions are often framed as a choice between CBDC and tokenization. This framing, however, is increasingly misleading, particularly in Asia.
Across the region, central banks are not converging on a single model. Instead, they are pursuing different approaches toward broadly similar objectives: faster and safer settlement, atomic exchange of funds and assets, and the preservation of public money as the trusted foundation of an increasingly digital financial system. These differences reflect not just technological preferences but variations in existing systems, regulatory philosophy, political economy constraints, and stages of financial development.
Attempts to impose a single global blueprint risk overlooking these institutional realities. Central banks operate within domestic legal frameworks, market structures, and public expectations that shape which forms of innovation are both feasible and legitimate. From this perspective, diversity in institutional pathways should be seen as a stabilizing feature of the global monetary system rather than a source of fragmentation.
CBDC as a Platform for Structural Modernization
In some large emerging economies, CBDC has become a vehicle for structural modernization rather than just an innovation in payments. India provides a clear example. With its Unified Payments Interface already delivering efficient, inclusive retail payments, the Reserve Bank of India has positioned retail CBDC as a complementary instrument rather than a substitute for existing systems. Policy attention has focused on wholesale CBDC, particularly in interbank settlement and government securities transactions. In these wholesale domains, CBDC offers a platform to test improvements in settlement finality, delivery-versus-payment mechanisms, and operational efficiency—capabilities that would be difficult to achieve through incremental upgrades to existing real-time settlement systems alone. Wholesale CBDC thus functions as an experimental layer for gradual infrastructure renewal, rather than as a wholesale replacement for established arrangements.
The People’s Republic of China (PRC) follows a broadly similar logic. Domestically, the e-CNY reinforces the role of public money within the retail payments ecosystem under a carefully managed institutional framework. Internationally, the PRC’s participation in multi-currency wholesale CBDC experiments for cross-border settlement highlights how CBDC is viewed not merely as a technical innovation but as strategic financial infrastructure in an increasingly digital and geopolitically sensitive environment.
In both India and the PRC, CBDC serves as a tool for controlled system redesign, particularly where authorities judge that the long-term benefits of a new settlement platform outweigh the transition risks.
Hybrid Financial Hubs and the Integration of Tokenized Markets
A different pathway can be observed in Asia’s international financial centers, notably Singapore and Hong Kong, China. Rather than prioritizing either CBDC or tokenization in isolation, these jurisdictions have adopted hybrid strategies that integrate wholesale CBDC experimentation with market-led tokenization initiatives.
In Hong Kong, China, regulatory frameworks for crypto-asset activities and fiat-referenced stablecoins are designed to allow innovation to develop within clearly defined risk and supervision boundaries. At the same time, participation in wholesale CBDC experiments supports the exploration of programmable settlement in areas such as foreign exchange and securities markets. Singapore has taken a similar approach, engaging financial institutions in supervised experiments involving tokenized deposits, tokenized securities, and atomic settlement arrangements.
These hybrid strategies reflect the institutional realities of advanced financial hubs. With complex and deeply interconnected market infrastructures already in place, abrupt architectural change is neither necessary nor desirable. Instead, innovation proceeds through controlled experimentation, ensuring that increasingly tokenized markets remain anchored in central bank money.
Beyond Asia, recent discussions in Europe and at the Bank for International Settlements point toward a more incremental pathway centered on tokenized reserves and deposits. Under this model, existing central bank and commercial bank money is represented in tokenized form and used on permissioned platforms that support programmable settlement, extended operating hours, and the ability for different systems to work together with tokenized financial assets. The objective is to achieve many of the functional benefits associated with wholesale CBDC without disrupting the established two-tier monetary system.
The contrast between these approaches should not be overstated. They are not competing models but context-specific responses to different institutional constraints. Where infrastructure renewal is itself a strategic priority, CBDC may serve as a catalyst for broader reform. Where continuity and transition-risk management carry greater weight, tokenization offers a pragmatic extension of existing systems.
From an Asian perspective, the coexistence of multiple pathways is not a weakness but a strength. The region’s diversity allows experimentation across a wide range of institutions and market settings, generating insights that may prove valuable globally. Rather than converging prematurely on a single architecture, policymakers may benefit from recognizing that digital public money will likely evolve along multiple, regionally differentiated trajectories.
The central policy challenge, therefore, is not to choose between CBDC and tokenization, but to ensure that whichever pathway is pursued strengthens the role of public money, supports market integrity, and aligns with each economy’s stage of institutional development. In this respect, Asia is not following a fragmented course, but actively shaping a multipolar future for digital money and settlement.
