Central Bank Digital Currency (CBDC)

A central bank digital currency (CBDC) is a digital version of a country's fiat currency that is issued and backed by the central bank. It is designed to be a digital alternative to physical cash and can be used by individuals and businesses to make electronic payments.

CBDCs are considered a potential replacement for physical cash, which has been in decline in recent years due to the increasing use of electronic payments. They are also seen as a potential way for central banks to modernize their payment systems and keep pace with advances in financial technology.

CBDCs have the potential to offer a number of benefits, including increased financial inclusion, faster and more efficient payment processing, and improved security and traceability. However, they also raise a number of concerns, including issues around privacy, control, and stability.

Overall, CBDCs are a relatively new and evolving area of technology and are being explored by a number of central banks around the world. It is likely that the development and use of CBDCs will continue to evolve in the coming years as more is learned about their potential benefits and challenges.