CBDC (Central Bank Digital Currency)
A CBDC is a digital version of fiat money issued and backed by a central bank — legally tender, operationally digital and non-anonymous.
CBDCs differ from stablecoins: issued by a central bank, 1:1 claim on fiat, legally tender. Two variants: retail (public use) and wholesale (banks inter se). 130+ countries are researching CBDCs; China's digital yuan (e-CNY) is most advanced with 260M+ wallets. The digital euro is in concept phase at the ECB: rollout likely 2027–2029. Debate: privacy, surveillance, programmability (spending controls, interest), bank disintermediation.
Example
The ECB's digital euro would appear in citizens' wallets, distributed via banks, usable for P2P and retail. Offline capabilities in design; privacy protection under discussion (pseudonymous for low-value transactions).
Frequently asked questions
CBDC or stablecoin?
CBDC: central bank, legal tender, regulated. Stablecoin: private issuer, legally not tender (usually), market-driven. CBDCs will long-term compete with stablecoins for specific use cases.
Privacy risks of CBDC?
Heated debate. Possibly: central bank sees every transaction. ECB claims privacy-by-design, offline options and tiered privacy (anonymous for micropayments). Reality depends on final design and law.
Related terms
Further reading
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