## CBDC: how central banks create the money of the future

Central banks around the world are actively developing their own digital currencies — this is a sovereign payment medium of a new generation. Unlike cryptocurrencies, the value of such currency is pegged to the state and corresponds to the national fiat currency. The essence is simple: CBDC is electronic money issued by the central bank directly.

**Why Central Bank Digital Currencies are Needed**

The implementation of CBDC addresses several issues of the modern financial system. Firstly, these currencies reduce the costs of maintaining complex financial infrastructures and significantly lower the cost of international transfers. Secondly, they provide people without bank accounts access to official payments, freeing countries from the need to create expensive financial networks. Thirdly, CBDC eliminates the risks of intermediaries — for example, protecting against the consequences of mass withdrawals of deposits or bankruptcies of private issuers of digital currencies.

The main advantages include enhanced privacy, security, ease of use, and reliability of payments backed by the state.

**Two types of central bank digital currencies**

There are wholesale and retail options for CBDC. The first type is intended for financial institutions — they use it to manage liquidity and settlements, essentially holding reserves at the central bank. This allows for the use of monetary policy tools to regulate rates and influence interest rates.

Retail CBDCs are aimed at end consumers and businesses. They provide a stable, state-backed means of exchange. Retail central bank digital currencies can operate in two ways: on a token basis, which functions like cash, or on an account basis, requiring the identification of transaction participants.

Thus, CBDC represents an important stage in the evolution of monetary systems, combining the advantages of digital technologies with the reliability of government control.