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Central Bank Digital Currency
What is a central bank digital currency?
A central bank digital currency (CBDC) can be generally understood as a digital liability issued and backed by a central bank, denominated in an existing sovereign currency, used to exchange or store value, and considered legal tender. It is a digital fiat complement to paper banknotes and coins. Unlike a cryptocurrency, a CBDC represents a claim on a central bank (like cash) and is backed by the full faith and credit of the issuing government, reducing the risk of holding it.