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A New System
What is a CBDC and Why Should I Care?
A Primer with FAQ’s on the coming Central Bank Digital Currency
What exactly is a CBDC?
CBDC stands for Central Bank Digital Currency. We already have central banks, and we pretty much have digital currency now, right?
Yes and no. This is quite different, although for the typical consumer I’m sure they will make things as similar as possible to how they function today. In fact, Central Bank Digital Currency (CBDC) will be just one part of the significant changes in the financial system, and CBDC will work quite differently from today’s dollars.
Almost every country has its own central bank. Here in the US, we call ours the Federal Reserve. The EU Member Nations share a central bank called the ECB — the European Central Bank.
Central banks are kind of like a bank for banks, and a bank for the government. Central Bankers make the decisions about monetary policy — how the money in their respective countries will work.
Right now, central banks have reserves (money) held for the big commercial banks like Bank of America, Wells Fargo, and Chase. These reserves basically dictate how much money the banks can lend out to businesses and consumers. An increase…
