The disadvantages, however, are as follows:
Not universally accepted
No regulation by Government
18.3 CBDC
The central bank digital currency or CBDC is a digital currency
issued by the central bank of a nation that leverages some benefits
of cryptocurrencies by using the distributed ledger technologies at its
back. But does it not sound exactly like a Stablecoin? Perhaps, yes.
However, the biggest difference between them is that, while most
Stablecoins are created by private financial institutes, CBDC is
issued by the central bank, and hence, it’s a legal tender that can be
strictly regulated by the monetary authorities of a nation. Hence,
CBDC can be termed as “A Centralized Cryptocurrency” and is
universally acceptable.
18.3.1 CBDC Types
CBDC can be categorized into two types depending upon its
targeted users, i.e., wholesale and retail.
18.3.1.1 Wholesale CBDC
Wholesale CBDC deals with the tokenization of digital money issued
by the central bank, built with the goal of resolving liquidity and
counterparty risk issues. As shown in Figure 18.4, they can work in
scenarios where there is need of interbank instant settlements or
instant international money transfer, as follows: