Central bank digital currency

A central bank digital currency (CBDC; also called digital fiat currency or digital base money) is a digital currency issued by a central bank, rather than by a commercial bank. It is also a liability of the central bank and denominated in the sovereign currency, as is the case with physical banknotes and coins. Rather than a new currency, CBDC is a form of central bank electronic money that could be used by households and businesses to make payments. A report by the Bank for International Settlements states that, although the term "central bank digital currency" is not well-defined, "it is envisioned by most to be a new form of central bank money [...] that is different from balances in traditional reserve or settlement accounts.". The present concept of CBDCs differs from virtual currency and cryptocurrency in that a CBDC is or would be issued by a state. Most CBDC implementations will likely not use or need any sort of distributed ledger such as a blockchain. In 2023, the central banks of 114 countries accounting for 95% of the world’s GDP were said to be in various stages of evaluating the launch of a national digital currency. These included the ECB, the UK, and the US. China's digital RMB was the first digital currency to be issued by a major economy. Five central banks have launched a CBDC: the Central Bank of The Bahamas (Sand Dollar), the Eastern Caribbean Central Bank (DCash), the Central Bank of Nigeria (e-Naira), the Bank of Jamaica (JamDex), People's Bank of China (Digital renminbi) and the Reserve Bank of India (Digital Rupee). The ECB/Eurozone is preparing decision by end of 2023, following a study phase since 2021 regarding the possibilities of a digital euro. Some states have also issued, or have considered issuing, cryptocurrencies: these include Venezuela (Petro) and the Marshall Islands (Sovereign). These cryptocurrencies are often considered with the intent of increasing a state's independence from global financial systems, such as by reducing dependence on a foreign currency or by evading international sanctions.