Central Bank Digital Currencies

Digital currencies issued by central banks

• Central Bank Digital Currencies (CDBCs) are digital currencies proposed and issued by the central bank of a sovereign country

• generally, they take on a digital form of the nation's existing fiat currency, like digital Euro or digital Dollar

• with CBDCs, transfers could go through wallets directly from sender to receiver seamlessly and at little-to-no cost

• because CBDCs would theoretically reach anyone with an e-wallet, it would allow for an efficient and widespread transfer of money even to those who have not been able participate in the traditional banking system

• the domestic government could use CBDCs as a monetary-policy tool, where stimulus can be directly delivered to individuals

• though at first glance CBDCs and cryptocurrencies can seem interchangeable, the two are strikingly different both in ethos and design

• cryptocurrencies were founded on the idea of decentralization, privacy, and inclusion

• CBDCs are under centralized ownership by the government, traceable, and are inclusive only within the realms of the government's chosen boundaries