Glossary
Wholesale vs retail CBDC
Retail CBDC is central bank digital money for the public; wholesale CBDC is for institutions settling between themselves. The digital euro is retail.
Definition
Wholesale vs retail CBDC
Also written as: retail CBDC, wholesale CBDC
"CBDC" gets used as if it names one thing. It names two, and conflating them is the source of a large share of the confused commentary about the digital euro.
The distinction
| Retail CBDC | Wholesale CBDC | |
|---|---|---|
| Who uses it | The general public | Financial institutions |
| What it is for | Everyday payments | Settlement between institutions |
| Distribution | Through supervised PSPs | Directly among participants |
| Digital euro? | Yes — this is what it is | No |
The digital euro is retail
The digital euro is a retail central bank digital currency project of the ECB and the Eurosystem. It is money intended to be used by ordinary people for ordinary payments — which is why the design is preoccupied with things like holding limits, aliases, offline payments and free basic services for individuals.
Every one of those features only makes sense for retail. Nobody worries about the phone-number alias of a clearing house.
Why the confusion is consequential
Central banks have provided digital settlement money to financial institutions for decades. Those are established wholesale arrangements between a small number of supervised, sophisticated participants.
A retail CBDC is a different proposition entirely, because it touches everyone. That is precisely why it needs a rulebook, a distribution model through supervised PSPs, obligations on credit institutions, and a legislative basis — none of which a wholesale system requires in the same form.
So when you read that "central banks have had digital money forever, this is nothing new" — that statement is true of wholesale and misses the point about retail.
And not a cryptocurrency either
Retail CBDC is not the same category as a stablecoin or a cryptocurrency. The digital euro is central bank money, settled centrally on the DESP, with no blockchain involved.
Sources
Related reading
EUDI Wallet
The EU Digital Identity Wallet lets people in the EU identify themselves and store digital credentials. It is a separate initiative from the digital euro.
Acquiring PSP
An acquiring PSP serves business digital euro users — managing merchant accounts and the acceptance solutions through which businesses take payments.
Alias
An alias is a pseudonymous identifier — such as a phone number — standing in for a digital euro account, so you can be paid without revealing your DEAN.
BEAN
BEAN is the Basic Euro Account Number — positions 5 to 18 of a DEAN, the indicator digit plus the 13-digit serial.