Definition ∞ A central bank is a financial institution responsible for overseeing a nation’s monetary system and currency. It typically manages money supply, sets interest rates, and supervises commercial banks to maintain economic stability. The actions and pronouncements of central banks significantly influence traditional financial markets and increasingly, the digital asset space.
Context ∞ Discussions involving central banks in the context of cryptocurrency often revolve around their stance on digital assets, potential for central bank digital currencies (CBDCs), and monetary policy adjustments. The debate concerning interest rate hikes or quantitative easing by major central banks frequently impacts cryptocurrency valuations due to their correlation with broader market sentiment. Future developments to monitor include the issuance of CBDCs and the evolving regulatory approaches central banks may adopt towards digital assets.
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