CBDC (central bank digital currency)

A central bank digital currency is a digital form of a country's official currency, issued and backed by its central bank. Unlike bitcoin, it has a fixed value equal to physical cash, is legal tender, and is controlled by the central bank rather than a decentralised network. Unlike money in a bank account, it is a direct liability of the central bank.

CBDCs can be "wholesale", used between banks for settlement, or "retail", used by the public for everyday payments through digital wallets. Debates around CBDCs focus on payment efficiency and financial inclusion on one side and privacy, programmability and the impact on bank deposits on the other.

A CBDC is not a cryptocurrency in the investment sense and does not fluctuate in value against the currency it represents.