CBDC is the acronym for Central Bank Digital Currency, an acronym to indicate the digital versions of fiat currencies, issued by a Central Bank.
CBDCs are distinguished from cryptocurrencies due to the control system: if cryptocurrencies are based on the blockchain, a system of decentralized ledgers, Central Bank Digital Currencies are controlled by the monetary institution that issues them. They also differ from stablecoins, whose value is anchored to a fiat currency through a 1:1 ratio and are issued on multiple unauthorized public blockchains.
CBDCs consist of a reaction to all expressions without a central control. They respond to the need for regulatory control, financial stability, financial inclusion and technological innovation, as well as the need for Central Banks to integrate within the new digital innovation and recover their role predominant in the market.
CBDCs do not provide a single issuance model: various countries have already experimented with different approaches and technologies to be able to distribute the currency. Furthermore, they are designed to integrate the functions of paper money, making it possible to provide digital payments quickly and securely, to increase trade in the countries that will adopt the currency, to have legal tender} } and to be used by both private individuals and businesses.
The objective is to provide a more efficient alternative to cash through CBDCs and optimize monetary policy tools, as well as improve the interbank payment mechanisms and reduce risk and frequency of banking crises.
