Central Bank Digital Currencies (CBDCs) represent government-backed digital money, distinct from cryptocurrencies. The Bahamas (Sand Dollar) and Nigeria (eNaira) already launched CBDCs, while China’s digital yuan pilots expand. The Federal Reserve is researching a digital dollar, focusing on privacy and financial stability concerns.

Regulatory challenges include preventing bank disintermediation (if consumers move deposits to CBDCs) and maintaining monetary policy effectiveness. CBDCs could improve payment efficiency but raise surveillance concerns. The IMF is developing global standards to ensure interoperability between different countries’ systems.

For consumers, CBDCs may offer faster, cheaper transactions but with less anonymity than cash. Financial institutions face infrastructure changes to support CBDC integration. This revolution in money itself requires careful balancing of innovation and risk control.