The paper, authored by Maryam Taghiyeva of the Centre for Citizenship, Enterprise and Governance in the United Kingdom, addresses a gap that has persisted in the digital money literature. While earlier work, including analyses by the C.D. Howe Institute and the Bank for International Settlements, had recognised in broad terms that stablecoins and CBDCs could coexist, no systematic account existed of the specific regulatory, infrastructural, and macroeconomic conditions under which that complementarity actually materialises. The new study fills that void by proposing a five-layer architecture and testing it against real-world evidence.

The proposed architecture stacks digital money into five functional tiers. At the top sits the policy layer, where regulators define the legal conditions under which digital assets can operate. Below it lies the sovereign settlement layer, anchored by central banks issuing comparatively risk-free public money in the form of CBDCs. The third tier is the infrastructure layer, comprising payment networks and blockchain rails that connect traditional finance to digital assets. The fourth is the programmable transaction layer, where user-facing instruments—currently dominated by fiat-backed stablecoins, with tokenised deposits and tokenised real-world assets emerging—enable payments and financial applications. Finally, the market layer captures real-world adoption patterns shaped by macroeconomic conditions and institutional trust.

A central finding concerns the role of payment infrastructure. The study formulates a hypothesis that integration with mainstream payment rails is a stronger determinant of stablecoin adoption than sovereign licensing or state backing alone. The evidence supports it. Visa has piloted and expanded settlement using Circle’s USD Coin (USDC), reporting more than $225 million in USDC settlement transactions across a network that now supports multiple stablecoins and blockchain networks in over 30 settlement currencies. Mastercard, through its collaboration with the cross-border payments provider Thunes, enables financial institutions to send funds directly into stablecoin wallets via Mastercard Move, a money-transfer network spanning more than 200 markets. Stripe, in partnership with Shopify, has rolled out stablecoin payment tools for online merchants, with volumes growing fastest in markets where dollar settlement offers an advantage over local currency volatility.

The counterfactual is instructive. Nigeria’s eNaira, a fully licensed sovereign digital currency launched in October 2021 with active government support, has achieved minimal transactional adoption. By late 2022 the eNaira had been downloaded roughly 800,000 times, according to the International Monetary Fund, but active wallets represented only a fraction of downloads, reflecting low engagement and limited merchant acceptance. In the same market, dollar-denominated stablecoins such as Tether and USDC have achieved substantial peer-to-peer volumes by virtue of their integration with accessible digital rails and existing user behaviours. The study is careful to acknowledge that this comparison cannot fully disentangle currency substitution from infrastructure effects, since a naira-denominated CBDC is set against predominantly dollar-denominated stablecoins, but the contrast remains illustrative of the association between infrastructure integration and adoption.

Regulatory clarity emerges as a necessary but not sufficient condition. The study scores five regulatory frameworks across nine parameters covering token specifications, reserve backing, issuer requirements, transparency, consumer protection, custody, redemption, issuance design, and counterparty due diligence. The United Arab Emirates’ VARA rulebooks and the Monetary Authority of Singapore’s framework score highest at 18 points each, followed by the European Union’s Markets in Crypto-Assets Regulation (MiCA) at 17, the United States’ GENIUS Act at 16, and the United Kingdom’s forthcoming FCA regime at 14. Jurisdictions with the most complete frameworks correspond to those where institutional stablecoin activity—licensed service providers, payment network integrations, and tokenisation pilots—is most developed. Yet a striking qualification emerges: retail adoption follows an entirely different logic. Argentina and Nigeria, which fall outside the regulatory index entirely, lead the world in retail stablecoin usage despite having no formal frameworks in place.

That paradox is explained by macroeconomic conditions. Argentina’s annual inflation exceeded 211 percent in 2023 and remained above 150 percent through 2024, rendering peso savings functionally untenable. Peer-to-peer stablecoin trading volumes surged during the 2023 currency crisis, and a survey by Americas Market Intelligence found that roughly 53 percent of Argentine adults had purchased digital currencies in 2022, with 46 percent citing protection against inflation and payments rather than speculation as their motivation. Nigeria’s naira depreciated by more than 70 percent against the US dollar between 2023 and 2024 while inflation exceeded 30 percent, and the country ranked fifth globally in Chainalysis’s 2025 Crypto Global Adoption Index, with approximately 60 percent of its stablecoin transaction volume tied to cross-border remittances according to TRM Labs. In both countries, stablecoins function as digital substitutes for foreign currency access—tools of value preservation rather than technological fashion.

The strongest evidence for deliberate layering comes from the United Arab Emirates and Singapore. The UAE is developing the Digital Dirham CBDC in parallel with licensed dirham-pegged stablecoins under VARA, and pilot data shows Digital Dirham activity concentrated in government payment flows—including the first recorded government transaction using sovereign digital currency infrastructure, conducted with the Ministry of Finance in 2024—while VARA-licensed stablecoin activity, from more than 600 licensed providers by early 2025, concentrates in retail and commercial payments. Singapore’s Project Guardian, involving institutions such as DBS Bank, JPMorgan, and Standard Chartered, has conducted live tokenisation transactions in foreign exchange and government bond markets with total notional value exceeding SGD 1 billion by 2025, while retail payment applications remain a separate track. In both cases, CBDCs gravitate toward settlement and infrastructure functions rather than competing as programmable retail instruments.

The study also looks forward to a multi-instrument future. Tokenised deposits—on-chain representations of commercial bank liabilities—are already operational through JPMorgan’s Kinexys and Citi’s Token Services, processing live transactions with institutional counterparties. Unlike stablecoins, which carry issuer and reserve risk but sit outside bank balance sheets, tokenised deposits carry commercial bank counterparty risk but often benefit from deposit insurance. Researchers at the Bank for International Settlements, notably Garratt and Shin, have argued that this distinction matters for the singleness of money: bearer instruments such as stablecoins risk departing from par value, whereas tokenised deposits settling in central bank money are more conducive to monetary stability. Tokenised real-world assets, recognised under MiCA’s asset-referenced token category, VARA’s asset-referenced virtual asset classification, and Singapore’s tokenised capital market product guidance, are beginning to serve as collateral and settlement assets, adding a third dimension to the programmable layer.

The policy implications are significant. Regulators, the study concludes, are not required to choose between stablecoins and CBDCs; the task is to design frameworks that enable their coexistence while managing risks. The question is no longer whether the two can coexist but how the terms of that coexistence should be structured—a question the UAE, Singapore, and now the United Kingdom, where the FCA has selected four firms to trial stablecoin products in its Regulatory Sandbox ahead of full enforcement scheduled for October 2027, are already answering in practice. What emerges is a hybrid, multi-pillar monetary system: sovereign digital cash anchoring settlement, regulated private tokens driving user-facing innovation, and an infrastructure layer binding them together. The layered future of money, the evidence suggests, has already begun.

Subject of Research: Complementary roles of regulated stablecoins and central bank digital currencies in a layered digital money architecture

Article Title: Layered digital money: the complementary roles of regulated stablecoins and CBDCs

Article References: Taghiyeva, M. (2026). Layered digital money: the complementary roles of regulated stablecoins and CBDCs. Frontiers in Blockchain, 9, Article 1882471. https://doi.org/10.3389/fbloc.2026.1882471

Image Credits: AI Generated

DOI: 10.3389/fbloc.2026.1882471

Keywords: stablecoins, CBDCs, digital money, MiCA, VARA, payment infrastructure, tokenised deposits, Argentina, Nigeria, financial regulation, blockchain, monetary architecture