Central Bank Digital Currencies (CBDCs) — Definition

What are CBDCs?

Are CBDCs a Good Idea?

The Benefits of CBDCs

Better Transparency

Preventing Fraud

Financial Inclusion

The Disadvantages of CBDCs

Disintermediation of Banks

Acceleration of Bank Runs

Potential Privacy Problems

What Can We Expect from CBDCs?

The Future of CBCDs

Takeaways

  • People are becoming more familiar with the technology behind digital currencies as the cryptocurrency industry continues its rapid expansion.
  • There is a constant emergence of innovative forms of digital currency, and a number of important financial institutions are actively exploring these new forms.
  • CBDCs are digital currencies issued by central banks that individuals and companies can use to make payments and store value.
  • CBDCs are comparable to the fiat money that is in circulation, but it consists of digital money issued by the central bank in the national unit.
  • It is essential to bear in mind that central bank digital currencies (CBDCs) are not the same thing as cryptocurrencies like Bitcoin (BTC).
  • CBDCs could make the financial scene increasingly robust by encouraging competition, productivity, regulation, and creativity in the financial sector.
  • Token-based and account-based designs are the two most frequent formats for CBDCs’ underlying architecture.
  • CBDCs have the potential to improve financial inclusion, which is especially important during challenging times like a pandemic.

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