Crypto glossary
CBDC (central bank digital currency)
A CBDC, or central bank digital currency, is a digital form of a country's official money, issued and backed directly by its central bank.
Unlike bank deposits, which are claims on commercial banks, a CBDC is a direct liability of the central bank, like cash. Unlike bitcoin or stablecoins, it is issued by a state authority and carries the same value as the national currency. A CBDC may or may not use blockchain technology.
Designs fall into two groups. Retail CBDCs are meant for the public, as with China's e-CNY pilot, the Bahamas' Sand Dollar launched in 2020 and the European Central Bank's digital euro project. Wholesale CBDCs are limited to banks and are used to settle large interbank payments.
Supporters cite faster payments and financial inclusion. Critics raise concerns about privacy, state surveillance of spending and the risk of drawing deposits away from banks. In the US, a January 2025 executive order barred federal agencies from pursuing a CBDC.
Example
In a retail CBDC system, a shopper pays for groceries from a digital euro wallet on their phone, and the payment settles instantly in central bank money, with no card network involved.
Related terms
Latest articles on CBDC
- South Korea Plans CBDC-Backed Deposit Token Trial for Public Spending
- India and Russia Explore CBDC Payments as Bilateral Trade Nears $60 Billion
- India Prepares Tokenized Corporate Bond Pilot With CBDC‑Based Settlement
- Piero Cipollone Highlights Robust Privacy Standards Amid Rising CBDC Criticism
- BRICS Explores CBDC and Payment Links to Cut Cross‑Border Costs
