CBDC (Central Bank Digital Currency) is a type of digital currency created by central banks or other public authorities. It can be used as an alternative form of payment and to store value in the same way as traditional currencies such as the US dollar, Euro, or Japanese Yen.
Unlike cryptocurrencies such as Bitcoin that are decentralized and not issued by any particular government or state-sponsored entity, CBDCs are issued and managed directly by a central bank. In addition to offering users greater control over their money than with fiat currencies, CBDCs offer increased efficiency for international payments and transactions due to lower costs associated with cross-border transfers when compared to traditional methods like wire transfer services.
CBDCs also have potential benefits from an economic perspective since they allow central banks greater flexibility in setting monetary policy through direct influence on interest rates. Moreover, they provide more efficient ways for governments to collect taxes while reducing opportunities for fraud and corruption due to improved transparency around financial activities enabled by distributed ledger technologies like blockchain technology underlying many modern digital assets including most leading cryptocurrencies today.
Finally, CBDCs could potentially become popular tools among individuals looking for alternatives investments given their low volatility relative to both fiat currencies and cryptocurrency markets which often experience high levels of price fluctuations over short periods of time
