Definition ∞ Digital fiat refers to a central bank digital currency, which is a digital form of a country’s national currency issued and backed by its central bank. Unlike decentralized cryptocurrencies, digital fiat maintains the full faith and credit of the issuing government. It aims to modernize payment systems, enhance financial inclusion, and potentially improve monetary policy transmission. This represents a sovereign digital liability.
Context ∞ Digital fiat is a prominent topic in global financial news, as central banks worldwide explore its development and implementation. Discussions often center on its potential impact on commercial banking, privacy considerations, and its role in international payments. News coverage tracks pilot programs, policy debates, and technological advancements related to these state-issued digital currencies.
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