CBDC=sovereign bccy

“Central bank digital currency” is a standard acronym. Chinese digital yuan is an example.

  • More than “pegged” it’s identical to the fiat currency, issued by the same entity as the fiat currency
  • centralized .. CBDC is centrally controlled/governed by one organization, while bccy is usually decentralized. The control is on the software release.
  • not anonymous .. Unlike anonymous transactions as on public blockchains, transactions are tracked
  • speeds up cross-border payments including remittance. No middleman except the issuing central bank.
  • For a particular consumer wallet, a CBDC balance is mostly stored on a smartphone, but can reside on a card (no connectivity required)
  • can be used without internet, but I think it’s tricky to prevent overspending
  • can be used without a bank account… I think the wallet is identified by the mobile number. I think mobile numbers are registered under a national ID. Note all such IDs are at the national level
  • legal tender .. unlike most bccy, a CBDC is legal tender, fully controlled by a central bank
  • blockchain .. CBDC can use blockchain in a limited way. It may use its own private blockchain + distributed ledger. I feel such a blockchain is 10% similar to the BTC blockchain, and 90% similar to a traditional database.