For more than 10 years of existence, blockchain technology has gone far beyond the functioning of cryptocurrencies. Currently, the governments of many countries are considering the possibility of introducing CBDC into their financial system.
CBDC (Central Bank Digital Currency) is the digital currency of the central bank of a certain country or region. It is a virtual form of fiat money regulated by a country’s monetary authority and implemented through a database controlled by a central bank, government or authorized private sector entities.
It is worth distinguishing CBDC from cryptocurrencies and other virtual assets. Although the idea itself was taken from Bitcoin, CBDC can serve as a legal tender unlike it.
Why CBDC when there are fiat currencies?
The concept of CBDC is to be an additional payment method in the territory of a certain country. The digital currency will ensure the instant speed of settlements, strengthen their stability, and also facilitate the process of cross-border transfers. In addition, CBDC enables greater financial inclusion by offering a payment infrastructure with lower transfer costs.