CBDC Definition
CBDC stands for Central Bank Digital Currency, which refers to the digital form of a central bank's currency issued by various countries' central banks. The implementation of a legal digital currency can be based on a traditional centralized central bank account system or can be account-less, represented by a specific cryptographic code and algorithm stored under a username. It can be value-based or token-based. Depending on the specific use cases, CBDCs can be classified as wholesale CBDCs or retail CBDCs. The former is used for interbank payment clearing, financial transaction settlement, etc., while the latter circulates among the general public.
Central Bank Digital Currency is a digital form of legal tender issued by a central bank, based on a sound monetary system, and possessing characteristics of value and legal tender status. The purpose of CBDC is to address existing challenges in the payment ecosystem and innovate local and cross-border payment methods, Globally, over 80% of central banks have been involved in researching and developing their CBDCs.
The global trend of digitization continues to grow, with cashless payment methods such as contactless cards and digital wallets being increasingly adopted. It is reported that global non-cash payment transactions reached 10.4 trillion in 2020, and it is projected to increase by 82% by 2025 and almost double by 2030. A study by the World Bank found that two-thirds of adults worldwide have used digital payment methods for sending and receiving payments.
The central bank further explores the potential for the development of CBDCs to meet the public's demand for reliable digital payment methods. This type of digital payment method should be widely accepted both locally and across borders, and has a high degree of operational flexibility.
