Central Bank Digital Currency (CBDC)
A central bank digital currency (CBDC) is a digital version of a country’s sovereign currency, issued and regulated by the central bank. Unlike cryptocurrency, a CBDC is centralised and government-backed.
Motivation (prasad-2021-five-myths-cryptocurrency): Competition from private stablecoins and cryptocurrency has prodded central banks worldwide to develop their own digital currencies to maintain monetary sovereignty in the transition to digital payments.
Status (as of 2021):
- Live: Bahamas (Sand Dollar)
- Trials underway: China (digital yuan), Japan, Sweden
CBDCs represent the mainstream path to digital money: sovereign-backed, stable, and regulated — contrasting with decentralised cryptocurrencies while borrowing their technological lessons.
See cryptocurrency, stablecoin.