The New Digital Mercantilism:

 

How Nations Are Weaponizing Money in the CBDC Era

In late 2025, China’s digital yuan pilot crossed a remarkable threshold: $986 billion in total transaction volume across 17 provincial regions. Meanwhile, the European Central Bank announced it would make a final decision on launching the digital euro by 2026. 

In a striking contrast, the United States issued an executive order halting all federal work on a retail Central Bank Digital Currency—making it the only major economy to formally step back from the race.

These aren’t just technical milestones in payment innovation. They’re strategic moves in a new form of economic statecraft—what we might call “digital mercantilism.” Just as nations once competed for dominance through control of trade routes and precious metals, today’s powers are positioning themselves to control the infrastructure of money itself. And the decisions being made right now will reshape global finance, international trade, and individual wealth for decades to come.

From Research to Reality: The Global CBDC Race

The numbers tell a compelling story. As of 2025, 137 countries representing 98% of global GDP are actively working on Central Bank Digital Currencies—up from just 35 nations in 2020. Seventy-two of these are in advanced stages of development, pilot, or launch. This isn’t a fringe experiment anymore; it’s a coordinated global transformation.

But full implementation remains rare. Only a handful of countries—the Bahamas, Jamaica, Nigeria, and Zimbabwe—have actually launched retail CBDCs for public use. The real action is happening in the pilot phase, where major powers are testing designs, building infrastructure, and positioning for advantage.

China leads the pack with its e-CNY, the world’s largest CBDC pilot. The People’s Bank of China has integrated the digital yuan with dominant payment platforms like Alipay and WeChat Pay and has even extended it to Hong Kong for cross-border transactions. Beijing views this not merely as a payment upgrade but as a strategic instrument to promote what it calls a “multipolar currency system”—a direct challenge to dollar dominance.

The European Union is pursuing its own “global euro moment” with the digital euro project, now in its preparation phase. The European Central Bank’s primary motivation is clear: bolster the euro’s international standing and prevent foreign CBDCs or private stablecoins from dominating European payment space.

And then there’s the United States—the notable outlier. By halting retail CBDC work while continuing limited research into wholesale applications, the US risks ceding first-mover advantage and the ability to shape international standards. In a game where network effects and technical architecture matter enormously, sitting on the sidelines has consequences.

Programmable Money, Programmable Power

Here’s where it gets interesting: a CBDC isn’t just digital cash. The design choices embedded in these systems become tools of economic power.

Programmability allows governments to embed rules directly into money. Imagine stimulus payments that expire if not spent within 90 days, forcing immediate consumption. Or welfare funds that can only be used for food and housing, not alcohol or gambling. In wholesale markets, programmability enables “atomic settlement”—two assets transferring simultaneously with zero settlement risk. This isn’t science fiction; it’s being actively tested in pilot programs worldwide.

Data access creates a fundamental tension between financial integrity and privacy. Every CBDC transaction generates data—who paid whom, when, and for what. While most designs envision a two-tier system where commercial banks handle customer identification (shielding central banks from personal data), the potential for surveillance remains. Sixty-eight percent of central banks cite data privacy as their biggest concern, yet the temptation to leverage transaction data for policy or enforcement is enormous.

Interoperability—or the deliberate lack of it—becomes a strategic weapon. Will your CBDC seamlessly connect with other nations’ systems, or will it create a walled garden that forces trading partners into your ecosystem? China’s Project "mBridge", a cross-border wholesale CBDC platform involving Thailand, the UAE, and Saudi Arabia, is building payment rails that bypass the dollar-dominated SWIFT system entirely. This isn’t just about efficiency; it’s about creating alternative power structures in global finance.

The game theory here is fascinating. Research suggests a “pecking order” of incentives: nations with strong but non-dominant currencies (like China) have the greatest motivation to move first, hoping to set standards and gain technological advantage. The dominant reserve currency holder (the US) has weaker incentive to move first but strong incentive to react defensively. And nations with weak currencies may skip the whole exercise, potentially adopting foreign CBDCs or cryptocurrencies instead.

Digital Currency Blocs: The New Cold War?

We’re witnessing the emergence of competing monetary spheres of influence—digital currency blocs that could fragment the global financial system.

The strategic implications for sanctions are profound. The increasing use of financial sanctions has spurred interest in payment systems less reliant on the US dollar and SWIFT. Wholesale CBDC projects like mBridge are explicitly designed to facilitate international trade settlement outside traditional channels. Over time, this could erode the effectiveness of sanctions as a tool of foreign policy—a development with enormous geopolitical consequences.

There’s also a complex power dynamic emerging between governments, central banks, and the tech companies building CBDC infrastructure. Who controls the code controls the system. China has leveraged its domestic tech giants; the EU is navigating public-private partnerships; and the US private sector is watching nervously as other nations potentially lock in architectural advantages.

For developing nations, CBDCs present both opportunity and risk. On one hand, they offer a chance to leapfrog legacy infrastructure and achieve financial inclusion—62% of emerging market central banks cite this as a primary motivation. On the other hand, adopting foreign CBDC technology or standards could create new forms of dependency, replacing one form of financial colonialism with another.

Navigating the Fragmented Future: A Wealth Builder’s Playbook

So what does this mean for individuals and institutions trying to build and protect wealth?

First, diversification takes on new meaning. In a world of competing digital currency blocs, holding assets across different monetary systems becomes a hedge against geopolitical risk. This isn’t just about currencies—it’s about understanding which payment rails your wealth can access and which it cannot.

Second, privacy becomes a premium asset. As CBDCs create unprecedented transaction visibility, privacy-preserving technologies and strategies will command value. This might mean holding some wealth in systems with stronger privacy protections or using intermediaries that shield transaction data.

Third, infrastructure plays matter. The companies building CBDC systems, providing interoperability solutions, and developing privacy-enhancing technologies represent genuine investment opportunities. This is the picks-and-shovels play of the digital currency gold rush.

Fourth, stay informed and adaptable. The CBDC landscape is evolving rapidly. What works in 2026 may be obsolete by 2028. Monitor developments in your jurisdiction, understand how CBDCs might affect your existing assets, and prepare for a multi-currency digital future.

The most important insight: in the CBDC era, financial sovereignty isn’t just about how much wealth you have—it’s about how much control you retain over it. A programmable currency is a controllable currency. Understanding the rules embedded in your money becomes as important as understanding the markets you invest in.

The Stakes of Digital Mercantilism

Central Bank Digital Currencies are not simply technological upgrades to payment systems. They are tools of economic statecraft—instruments nations are using to project power, reshape trade relationships, and position themselves in a reconfigured global financial order.

The game-theoretic competition is already underway. China is building alternative payment rails. Europe is defending its monetary sovereignty. The United States is making a calculated bet that private sector innovation will suffice. And dozens of other nations are choosing sides, forming alliances, and making design decisions that will echo for decades.

The next few years will determine whether we get a fragmented monetary landscape of competing blocs or a coordinated international system with agreed-upon standards. Either way, the decisions being made now about CBDC design—about programmability, privacy, and interoperability—will have profound implications for individual financial freedom and wealth building.

In this new era of digital mercantilism, financial literacy means understanding not just markets and assets, but the strategic power plays reshaping the very nature of money. Your wealth isn’t just stored in accounts and investments—it’s embedded in systems designed by nations pursuing their own strategic interests.

The question isn’t whether CBDCs will reshape global finance. They already are. The question is whether you’ll understand the game well enough to play it to your advantage.