How do central bank digital currencies work?

• A Central Bank Digital Currency (CBDC) is a digital representation of a country's fiat currency that also serves as a claim against the central bank. Rather than producing money, the central bank issues electronic coins or accounts backed by the government's full faith and credit.
• The digital equivalent of a country's fiat money is a central bank digital currency.
• The monetary authority or central bank of a country issues and regulates CBDCs
• CBDCs enhance financial inclusion and make monetary and fiscal policy execution easier.
• They may not be as anonymous as some cryptocurrencies because they are a centralised kind of currency
• Many countries are looking into how CBDCs may impact their economies, existing banking networks, and overall stability.

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