Stablecoins, CBDCs and the Battle for Trust
Where will the contest for the future of money be decided?
In 2024 Tether (USDT), a privately issued token pegged to the American dollar, processed more than $10trn in transactions (PaymentsJournal, 2025), more than Visa or Mastercard. For policymakers in Washington, Frankfurt or even London, that figure is certainly draws up a curiosity. For many retail business owners in Lagos, consumers in Buenos Aires or Istanbul, it is a reality of daily life. Stablecoins (digital dollars accessible on a smartphone) have become a lifeline in countries where inflation consumes local savings and foreign currency fiat is difficult to access from traditional banks. While central bankers theorise about the digital money of the future, ordinary people in emerging markets are already using it.
At the same time governments are rolling out their own experiments. Central Bank Digital Currencies (CBDCs) are meant to modernise national payments and restore state control. Nigeria was first to launch in Africa with the eNaira. China has piloted the digital yuan. India is testing a wholesale CBDC (RBI e₹-W pilot launched on 1 November 2022). Over 130 countries are exploring their own projects. Their sales pitch is enticing: cheaper transactions (lower fees), financial inclusion, and a sovereign alternative to privately issued money. Yet enthusiasm among citizens has been muted. Uptake of the eNaira, for example, is so weak that it has become a cautionary tale rather than a model.
The divergence between the two approaches is striking. Stablecoins are a market-driven response to real problems. A student in Nairobi can receive tuition funds from an uncle in London and convert to fiat within minutes. A trader in Kumasi can restock inventory by sending USDT to his supplier in China, without begging banks for scarce dollars. An exporter in Buenos Aires can hedge against inflation simply by holding his digital tokens in a wallet. The appeal is obvious: stablecoins are fast, accessible and, crucially, denominated in the world’s reserve currency.
CBDCs, by contrast, are technocratic projects. They are designed to preserve monetary sovereignty in an era when national currencies are losing credibility. Central banks promise better oversight of money flows and tools to fight illicit finance. But this very control is also their weakness. Citizens in fragile economies often mistrust state money precisely because it can be devalued at a stroke. Packaging the same currency in digital form does little to rebuild confidence. For a Nigerian consumer already hedging with stablecoins, the question is simple: why hold eNaira when USDT is just a click away?
The competition is therefore not between two technologies but between two philosophies. Stablecoins are bottom-up, shaped by market demand and fuelled by the credibility of the dollar. CBDCs are top-down, reliant on government enforcement and citizens’ willingness to comply. In practice, the two systems may evolve side by side. But the balance of power - who commands trust, who drives adoption - will matter profoundly for the financial future of emerging markets.
Consider Africa. Dollar scarcity has long shaped its economies. Importers struggle to source foreign currency, businesses face unpredictable exchange rates, and households hoard dollars they’re able to get, as a store of value. Stablecoins offer a digital workaround. In Nigeria, peer-to-peer (P2P) platforms move billions each month as people convert naira into USDT or USDC. In Kenya freelancers increasingly demand payment in digital dollars rather than local shillings. Even in South Africa, where the rand is more stable, younger consumers experiment with stablecoins for cross-border commerce.
Latin America tells a similar story. In Argentina, where annual inflation reached 117.8 percent in 2024 (INDEC/BBVA Research), stablecoins have become a parallel currency. In Venezuela, where the bolívar collapsed, citizens use USDT for everyday trade. Governments see the threat. Brazil has accelerated its CBDC project, the “drex,” hoping to channel digital demand into sovereign rails. Yet scepticism lingers: will consumers really prefer drex to a global dollar stablecoin when trust in the real is fragile?
For policymakers this creates a dilemma. On the one hand stablecoins promise efficiency, inclusion and global integration. On the other they deepen dependence on the American dollar and erode national monetary control. For fragile economies this is particularly unsettling. If more citizens save in stablecoins than in local bank accounts, what becomes of central banks’ ability to manage inflation, credit or capital flows? Some governments may respond with regulation or outright bans, though enforcing them will be tricky. Others may accelerate their own CBDC rollouts in a bid to compete.
The likelier outcome is a messy coexistence. Stablecoins will dominate in cross-border flows, remittances and digital commerce. CBDCs may carve out niches in domestic payments, welfare transfers and tax systems. Banks and fintech firms will quietly integrate both, offering consumers the option to transact in whichever form of digital money they prefer. The future will be hybrid, not binary.
Yet beneath the technicalities lurks a deeper question: who do citizens trust with money? In much of Africa and Latin America, that trust has already shifted toward the dollar, and by extension to stablecoins. CBDCs, unless backed by credible economic management, may struggle to win it back. Governments can digitise their currencies, but they cannot digitise confidence.
The stakes are high. Money is not merely a means of exchange; it is a contract of trust between citizens and institutions. When that trust frays, people seek alternatives. In emerging markets they have found one in stablecoins. Whether central banks can reclaim it through CBDCs remains uncertain. What is clear is that the contest for the future of money will be decided not in boardrooms in Basel, but on smartphones in Lagos, Buenos Aires and beyond - one transaction at a time.