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ARTICLE · 04 SEPTEMBER 2023

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A Deeper Look Into Central Bank Digital Currencies (CBDCs): Advantages And Disadvantages Of CBDBs

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Central Bank Digital Currencies (CBDCs) are a hybrid between physical banks and digital money. CBDCs are a form of digital currency which must be issued and regulated by a country's central bank...

MaltaTechnology
Joseph F. Borg
Joseph F. Borg
Eve Sheasby
Eve Sheasby
Martina Grech
Martina Grech
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Central Bank Digital Currencies (CBDCs) are a hybrid between physical banks and digital money. CBDCs are a form of digital currency which must be issued and regulated by a country's central bank, the value is fixed by said central bank and is equivalent to the country's fiat currency (a currency declared as legal tender however has no fixed value and is not backed by a commodity). The relevancy of CBDCs is ever-growing due to the direction our society is taking, we are heading further towards a cashless society with a preference for electronic transactions, hence demand is being created for CBDCs.

To further understand CBDCs they should be compared to crypto-assets and stablecoins. Stablecoins and crypto-assets are issued privately whereas CBDCs are state issued and operated. Furthermore, crypto-assets are often said to be volatile, whereas CBDCs are potentially more stable as argued by the Bank of England.

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