Understanding CBDC (Central Bank Digital Currency)?
What is a CBDC (Central Bank Digital Currency)? As the financial world continues to evolve with the rise of digital payments, cryptocurrencies, and fintech innovations, central banks around the world are exploring a new concept—Central Bank Digital Currency (CBDC). But what exactly is a CBDC, and how does it impact the economy, financial institutions, and everyday consumers? Let’s delve into the details. Understanding CBDC CBDC, or Central Bank Digital Currency, is a digital form of a country’s national currency issued and regulated by the central bank. Unlike cryptocurrencies such as Bitcoin or Ethereum, which operate on decentralized networks, a CBDC is a centralized digital currency backed by the government. It functions as legal tender and is designed to complement or replace physical cash, enhancing the efficiency and security of transactions. Types of CBDCs CBDCs can be broadly categorized into two types: Retail CBDCs – These are designed for public use, allo...