CBDC (Central Bank Digital Currency)

A CBDC is a digital form of a country’s fiat currency that is issued by the central bank. Unlike cryptocurrencies like Bitcoin, which are decentralized and operate on a peer-to-peer network, CBDCs are centralized and backed by the government. CBDCs are created and regulated by the central bank, giving them legal tender status and making them a form of official currency.

CBDCs are designed to offer the benefits of digital currency, such as instant transactions and reduced transaction costs, while maintaining the stability and security of traditional fiat currency. They can be used for everyday transactions, just like physical cash or electronic bank deposits.

CBDCs are seen as a way for central banks to modernize the financial system and stay competitive in the digital age. They also have the potential to increase financial inclusion by providing access to banking services for those without traditional bank accounts.