State Digital Currency

Definition ∞ State digital currency refers to a digital form of a country’s fiat currency, issued and regulated by its central bank. Unlike decentralized cryptocurrencies, it is a direct liability of the central bank, carrying the full faith and credit of the issuing government. It aims to offer the benefits of digital payments, such as efficiency and accessibility, while maintaining monetary sovereignty. This form of money can exist alongside physical cash.
Context ∞ The development and potential deployment of state digital currencies, also known as Central Bank Digital Currencies (CBDCs), are major global initiatives. News frequently covers pilot programs, policy debates, and international collaborations regarding their design and impact on national payment systems. Key discussions revolve around privacy, financial inclusion, and geopolitical implications.