Central Bank Digital Currencies (CBDCs) are digital forms of money issued and regulated by central banks. Unlike cryptocurrencies such as Bitcoin, CBDCs are backed by governments and designed to maintain financial stability.
What Are CBDCs?
A CBDC represents a country’s official currency in digital form. It can be used for everyday transactions, online payments, and cross-border transfers with higher efficiency and security.
Why Are CBDCs Important?
CBDCs aim to improve payment systems, reduce transaction costs, increase financial inclusion, and provide better control against fraud and money laundering.
Challenges and the Future
While CBDCs offer many benefits, concerns remain about privacy, cybersecurity, and the role of banks. As more countries experiment with digital currencies, CBDCs may become a key part of the future financial system.