Central Bank Digital Currency (CBDC)
A (CBDC) represents a digital rendition of conventional national fiat currency. Under the jurisdiction of a national monetary authority, these digital currencies are formulated to replace traditional fiat currency while improving convenience for users. CBDCs hold the promise of advancing financial inclusion by reducing transaction costs and accelerating cross-border settlements, thereby benefitting a wider range of individuals. However, it’s important to note that CBDCs differ from decentralized blockchains as they lack decentralization and do not impose a supply cap. Critics argue that CBDCs may not effectively curb inflationary money printing, and raise concerns about the potential consequences for financial privacy and censorship when a government exercises control over a nation’s currency through a CBDC.