CBDC
Central Bank Digital Currency
A Central Bank Digital Currency (CBDC) can most easily be understood as a digital form of cash. It can be issued by the central bank, accessible to the general public, and used to settle transactions between firms and households. The unit of account would be the national currency, and it could be exchanged at parity (i.e. one for one) with other forms of money, such as physical currency or electronic deposits with well-regulated financial institutions.
What are the main differences between cryptocurrencies and CBDCs? In other words, what makes a CBDC money? A central bank has the ability to ensure that a digital currency it issues exhibits the three main features of money – that is, a CBDC could function as a widely accepted means of payment, store of value and unit of account.
Because it is issued by a central bank, a CBDC would have legal tender status, making it widely accepted as a means of payment. A CBDC would also be an equivalent store of value to other forms of money, since it could be exchanged for an equal value of physical cash or electronic deposits. Finally, the unit of account for CBDC issued by the Australian Reserve Bank would be the Australian dollar. This means it could be used to measure the value of goods and service.