What are CBDCs?

The virtual form of a fiat currency is referred to as “Central Bank Digital Currency” (CBDC). The CBDC is a digital token or electronic record of a country’s official currency. So, the monetary authority or central bank of the country issues and regulates it. As a result, CBDCs are backed by the issuing government’s complete confidence and credit. By integrating the unbanked into the financial system, CBDCs can make monetary and fiscal policy implementation easier and increase the financial inclusivity of an economy. However, they may also destroy citizens’ privacy because they are a centralised form of cash. CBDCs are now being developed in many parts of the world.