What is a Central Bank Digital Currency (CBDC), and How is It Connected with Facebook-backed Diem?

What is a Central Bank Digital Currency (CBDC)?

Image source
Countries experimenting with CBDCs as of August 2021

Why do we need CBDCs?

  • CBDCs are centralized, which allows the government to control the money supply and assign particular entities to manage the distributed ledger. This can facilitate monetary policy flow and help the government focus on other bottlenecks, thus leading to economic stability.
  • Compared to fiat money, CBDCs are much more cost-efficient due to lower transaction fees.
  • They can potentially enable financial inclusion and security, granting the unbanked population access to money on their devices with no middlemen.
  • Due to the essence of the DLT, CBDCs will enable tracking payments, allowing the central entity (the government in our case) to trace all the transactions performed in the network. This feature will help the authorities stop money laundering and prevent terrorist financing.

Countries that launched a CBDC

Bahamas: Sand Dollar

China: e-CNY (Digital Yuan)

e-CNY infrastructure

Eastern Caribbean Area: DCash

France: Wholesale CBDC

Canada: Jasper

Singapore: Ubin

South Africa: Khokha

Other countries

How are CBDCs and Diem connected?

Blockchain-based CBDC infrastructure

Diem future alongside CBDCs

Conclusion

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Pontem Network

Aptos Blockchain Product Studios