Central Bank Digital

Definition ∞ Central Bank Digital refers to a digital currency issued and controlled by a nation’s central bank. Known as a Central Bank Digital Currency (CBDC), it represents a country’s fiat currency in digital form, serving as legal tender and operating on a ledger managed by the central monetary authority. Unlike decentralized cryptocurrencies, CBDCs maintain central oversight, aiming to combine the efficiency of digital payments with the stability and trust of state-backed money. These digital assets could exist in wholesale or retail forms, influencing financial systems.
Context ∞ The state of central bank digital currency development is a major topic globally, with many nations exploring or piloting their own versions. A key debate centers on the potential impacts on financial stability, privacy concerns, and the role of commercial banks in a CBDC-driven economy. Critical future developments include cross-border CBDC initiatives and the establishment of international interoperability standards, significantly reshaping global payment infrastructures.