Library · Crypto, word by word · Markets and money
What is a CBDC?
A CBDC (central bank digital currency) is a digital form of money that is a direct liability of a central bank, such as the Federal Reserve. Most digital money today, like a bank balance, is a liability of a private bank instead.
What it means for you
A CBDC is not a cryptocurrency or a stablecoin: it is issued by a central bank, not by a company or a public blockchain. An offer to sell you a CBDC, or to swap your coins into one before a deadline, does not come from a central bank, which would announce any real CBDC through its own channels.
A common mistake: “A CBDC is a government cryptocurrency, like a stablecoin issued by the state.”
In fact: A stablecoin is a private company's liability; a CBDC would be the central bank's own. Neither the Federal Reserve nor the BIS defines CBDCs as running on a public blockchain.
How it works
Money in a bank account is the bank's liability and carries the bank's credit risk; a CBDC would be a direct liability of the central bank, so the BIS notes it carries no credit risk. The BIS separates retail CBDCs, for the public's everyday payments, from wholesale CBDCs, used between banks and other financial institutions much like today's central bank reserves. Designs differ on who runs the payments: the central bank alone, or private firms in a two-tier model. A retail CBDC leaves a digital record of payments, which raises privacy and data questions. The Federal Reserve has not issued one.
Sources: Federal Reserve: Central Bank Digital Currency (CBDC), BIS FSI: Central bank digital currencies (executive summary) · checked 4 October 2026
Often confused with
Related words
Educational content, not financial advice. Written by hand and checked against the source named above. Something wrong? Tell us and we reply within two business days.