Central Bank Digital Currency [CBDC]
A CBDC is fiat money of a particular nation or region, issued and regulated by a country’s monetary authority. Thus, CBDC is money that a government establishes and backs through its central bank in a virtual form.
This article needs to be updated. (November 2021) |
A central bank digital currency (CBDC) (also called digital fiat currency or digital base money) is a digital currency issued by a central bank, rather than by a commercial bank.
A report by the Bank for International Settlements states that, although the term "central bank digital currency" is not well-defined, "it is envisioned by most to be a new form of central bank money [...] that is different from balances in traditional reserve or settlement accounts."
The present concept of CBDCs was inspired by Bitcoin and similar blockchain-based cryptocurrencies, but differs from such a virtual currency and cryptocurrency in that a CBDC is or would be issued by a state. Most CBDC implementations will likely not use or need any sort of distributed ledger such as a blockchain.
CBDCs are presently mostly in the hypothetical stage, with some in proof-of-concept programmes. According to ECB's chief Christine Lagarde, more than 80 central banks are looking at digital currencies. China's digital RMB was the first digital currency to be issued by a major economy. As of July 2022, four central banks have launched a CBDC: the Central Bank of The Bahamas (Sand Dollar), the Eastern Caribbean Central Bank (DCash), the Central Bank of Nigeria (e-Naira) and the Bank of Jamaica (JamDex).
Some states have also issued, or have considered issuing, cryptocurrencies: these include Venezuela (Petro) and the Marshall Islands (Sovereign). These cryptocurrencies are often considered with the intent of increasing a state's independence from global financial systems, such as by reducing dependence on a foreign currency or by evading international sanctions.
