CBDC
A central bank digital currency is digital money issued by a country’s central bank and designed to function as official legal tender.
A CBDC, or central bank digital currency, is a digital form of a national currency issued and backed by a central bank. Unlike Bitcoin or many stablecoins, a CBDC is not created by a private network or company; it is a direct public-sector version of money, similar in status to cash or central bank reserves. It may be designed for everyday public use, called a retail CBDC, or for banks and financial institutions, called a wholesale CBDC.
CBDCs matter because they could change how people and institutions make payments, settle transactions, and access digital money. Supporters see potential benefits such as faster transfers, lower payment costs, and improved financial inclusion, while critics focus on privacy, surveillance, cybersecurity, and the role of commercial banks. A practical comparison is a digital wallet holding central bank-issued dollars, euros, or yuan: it could be used like a payment app, but the money would be official central bank money rather than a balance held by a private company.
Other terms in CBDCs
Digital Euro
A digital euro is a proposed central bank digital currency that would let people and businesses use euro-area central bank money electronically.
Digital Yuan
China’s central bank digital currency, a digital form of the yuan issued by the People’s Bank of China for everyday payments.
Retail CBDC
A retail CBDC is digital central bank money designed for everyday use by the public, similar to digital cash.
Wholesale CBDC
A wholesale CBDC is central bank digital money designed for use by banks and other financial institutions, not the general public.