A Central Bank Digital Currency (CBDC) is a digital version of a country’s fiat currency that is issued and backed by the central bank of that country. CBDCs can be used for a wide range of financial transactions, including making payments, transferring money, and storing value.
CBDCs are different from cryptocurrencies, which are decentralized and not issued or backed by a central authority. CBDCs are intended to provide the benefits of digital currency while maintaining the stability and security of traditional fiat currency.
Some central banks are exploring the use of CBDCs as a way to modernize their payment systems, increase financial inclusion, and improve the efficiency of monetary policy. However, the development and implementation of CBDCs is a complex process that involves many considerations, including technical, legal, and regulatory issues.