Definition ∞ A form of digital money issued and managed by commercial banks. This currency represents a direct liability of the issuing bank, existing as electronic entries on its ledger. It operates within the existing regulated financial system, differing from decentralized cryptocurrencies in its centralized control and backing. Such digital currencies aim to modernize payment systems while maintaining financial stability.
Context ∞ The concept of bank digital currency is currently a subject of considerable discussion among financial regulators and central banks globally. Key debates center on its potential impact on monetary policy, privacy concerns, and the role of commercial banks in a digital economy. Future considerations involve its interoperability with central bank digital currencies and existing payment infrastructures.
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