💰 When you send money over InstaPay, tap a wallet app at checkout, split a dinner bill without anyone reaching for banknotes, none of that is central-bank money — it’s a claim on whichever bank or telco is holding it for you, just moving faster than it used to. The digital EGP (e-pound) that the Central Bank of Egypt (CBE) is now laying the groundwork for what would be something else.

What is a Central Bank Digital Currency (CBDC) in a nutshell? It’s digitalcash, the same as the banknote already in your wallet, except no bank or telco sits between you and the CBE to hand it over. Meanwhile, the CBE is moving slowly from concept to reality, laying the ground for a wholesale rollout first before moving into a riskier retail one.

The idea of central-bank-issued digital money exists because of what came before it. The rise of unregulated cryptocurrencies left central banks watching digital money develop entirely outside their own systems, and in a heavily digitized world, the response has been Central Bank Digital Currencies (CBDCs). A CBDC brings “the unique attributes of central-bank money — such as safety, settlement finality and integrity — into the digital economy,” Digital economy expert Mai Hegazi tells EnterpriseAM.

It is a sovereignty story: China was first to move at scale with the e-CNY, and the motivation was not only about consumer convenience. It is about a payment rail it controls end to end, one that doesn’t route through SWIFT— a worldwide interbank financial messaging system, Visa, Mastercard, or the USD-denominated infrastructure most of the world’s card payments still depend on, a former CBE expert tells us.

What makes the CBDC unique

It’s controlled and regulated by the Central Bank. Cryptocurrency is private and decentralized — no government or central bank backs it. “A CBDC changes the monetary instrument itself,” Hegazi explains. When a customer uses an instant payment method to transfer money from one account to another, the fund itself is a claim on the commercial bank. “The payment rail facilitates the transfer; it does not change the nature of the underlying money,” she adds. Today, the public only ever holds central-bank money as physicalcash — banks alone hold it digitally, as reserves. A retail digital EGP would put central-bank money directly in the public’s hands digitally for the first time.

What happens differently at the checkout? The tap could look the same regardless of which rail moves the money. But the difference lies behind the tap. When you pay through a fast payment system, you’re moving commercial-bank deposits. “An InstaPay transfer moves value between existing bank accounts, while a mobile wallet transfers e-money within the service provider’s ecosystem,” Financial Analyst Hany Abou El Fotouh tells us. Since this form of money represents a liability of the entity issuing it, it bears that issuer’s credit risk. A customer using a retail CBDC, however, uses money that is a liability to the central bank, so it does not carry any credit risk, according to the Bank for International Settlements (BIS).

CBDCs could carry offline payments: CBDCs also could have “the ability to maintain digital payments in circumstances where conventional connectivity is unavailable,” Hegazi explains.

Programmability remains the most debated feature, which refers to funds restricted to specific designated uses. It’s the feature central bankers pitch hardest and privacy advocates push back on hardest for the same reason. The ability to condition a payment on something (a subsidy that can only buy groceries, for example) is powerful precisely because it’s also a form of control. However, “conditional-payment functionality can be built around an unrestricted digital currency,” as Hegazi explains.

Wholesale first, retail later, maybe?

Retail CBDCs are the ones that would sit in a consumer’s pocket, and this stage is riskier as it could disrupt the banking system. Wholesale CBDCs, however, are meant for financial institutions. They work much like traditional central bank reserves, but offer extra features through tokenization, as BIS describes.

Advantages of retail CBDCs are still contested: On paper, retail CBDCs may allow reaching the unbanked, cutting the cost of handling physical banknotes, moving subsidy payments instantly and with a full record, and pulling a large informal economy toward formal channels, if implemented successfully. However, only three countries have completed this public retail rollout: The Bahamas, Jamaica, and Nigeria. Nigeria’s eNaira, though, is a cautionary tale, as it launched into a market that already had digital payments people liked, and adoption stalled.

The risks that explain the caution: The primary risks of CBDCs center on bank disintermediation if depositors shift funds away from commercial banks to use retail CBDCs. However, it depends on the operational architecture of CBDC. “Modern CBDC architectures can retain a strong role for commercial banks and payment service providers in onboarding, distribution, and customer services,” as Hegazi explains, so she does not see retail CBDCs competing with instant-payment systems. A retail CBDC also raises privacy concerns regarding state visibility into citizen spending. Then comes the structural cybersecurity threat of a single, highly centralized target.

The true strength of CBDCs resides in wholesale applications and cross-border payments, as Hegazi notes. Establishing a “multi-CBDC infrastructure could potentially bring different currencies, central-bank money and cross-border settlement onto a shared infrastructure layer, reducing some of the fragmentation inherent in traditional correspondent-banking arrangements,” she says.

A real-life proof of concept: In January 2024, a pilot cross-border transaction using the digital AED saw AED 50 mn sent to China via mBridge, which is a blockchain-powered platform facilitating real-time transfers between central banks in China, Hong Kong, and Thailand.

Where Egypt actually stands

The CBE is in proof-of-concept now, with a broad rollout loosely targeted for 2030, a date anchored to the 2024 IDSC cabinet roadmap, which ties the digital EGP to reaching 100% financial inclusion and 80 mn active e-wallets by decade’s end. In 2025, the CBE signed a cooperation MoU with the People’s Bank of China, including provisions on CBDC cooperation. In the same year, Bank Al Maghrib governor Abdellatif Jouahri said that Morocco is collaborating with the CBE on exploring cross-border payment applications with the support of the World Bank as well. However, no operational structure has been announced yet.