Glossary

Central bank digital currency

A digital form of a country's currency issued directly by the central bank, a proposal opposed by many conservatives on privacy grounds.

Also called: CBDC, digital dollar, central bank digital currency

A central bank digital currency (CBDC) is a digital version of a national currency that would be a direct liability of the central bank, like cash, instead of a claim on a commercial bank. Unlike cryptocurrencies such as Bitcoin, it would be issued and controlled by the government. Designs vary: "retail" CBDCs would be used by the public, and "wholesale" CBDCs only among financial institutions.

More than a hundred countries have researched or piloted them, and a few, such as the Bahamas and Nigeria, have launched. China has run a large pilot of the digital yuan. The Federal Reserve has studied a possible U.S. digital dollar and published a discussion paper in 2022 without deciding to issue one.

Supporters argue a CBDC could make payments faster and cheaper, increase financial inclusion and keep the dollar competitive. Opponents, many of them conservatives and libertarians, argue that it could give government a record of every transaction, threaten privacy, enable controls on spending such as freezing funds or restricting purchases, and displace banks. In 2025, President Trump signed an order barring federal agencies from working to create a U.S. CBDC, and legislation to prohibit one has been introduced in Congress. See monetary policy. See also quantitative easing.

Last reviewed November 8, 2026

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Related terms

Monetary policy The actions of a central bank, such as setting interest rates, to influence money, credit and economic activity. Quantitative easing A policy in which a central bank buys government bonds and other securities in large amounts to lower long-term interest rates and support the economy. Gold standard A monetary system in which a currency's value is tied to a fixed amount of gold. Dual mandate The Federal Reserve's congressionally assigned goals of maximum employment and stable prices (with moderate long-term interest rates).