What is a central bank digital currency (CBDC)?
Categories: Crypto News
Central bank digital currencies (CBDCs) have recently emerged as a hot topic in the financial space. Banks, Institutions, and governments are performing research and analysis on the economic and technical feasibility of introducing a new form of digital money and its impact on monetary and fiscal policy.A Bank of International Settlements report states that over 80% of central banks are already researching CBDC. It begs the question: why are these institutions preoccupied with CBDCs? In this explainer, we'll cover CBDCs, their importance in digital economies, countries exploring their use cases, and the road to mass adoption. CBDCs explained Cryptocurrencies, as we know them today, are extremely volatile and lack government backing — CBDCs overcome these concerns while using the same underlying distributed ledger technology of cryptocurrencies. Governments recognize CBDCs as legal tender in the issuing central bank's jurisdiction, meaning anyone can use them for payments and every merchant must accept them. In simpler terms, CBDC is short for Central Bank Digital Currency, an electronic form of central bank money that citizens can use to make digital payments and store value. A CBDC offers three main elements: