Definition ∞ Central bank deposits are funds held by commercial banks at their nation’s central bank. These deposits serve as a primary tool for central banks to implement monetary policy, influencing liquidity within the broader financial system. They represent a fundamental component of the reserve requirements that commercial banks must maintain. These balances also enable interbank settlements and transactions, acting as a secure and reliable store of value for regulated financial institutions.
Context ∞ Discussions around central bank deposits often relate to the potential impact of central bank digital currencies (CBDCs) on existing financial structures. The introduction of tokenized central bank money could alter how these deposits function, potentially offering new avenues for wholesale financial settlement and cross-border liquidity management. Regulators consider how to maintain financial stability and monetary policy effectiveness in a future where digital forms of central bank money coexist with traditional deposits.
Blockchain Knowledge
Cryptocurrency Foundation
Cryptospace Newsfeed
