CBDC (central bank digital currency).

In plain English

A central bank digital currency is national money in digital form, issued and backed by the central bank itself. That is the structural difference from the balance in a checking account, which is a claim on a commercial bank that could fail. Designs vary widely: some are wholesale, used only between financial institutions, while retail versions would be held by the public directly or through intermediaries. Debate centers on privacy, on what a central bank could see or restrict, and on what happens to bank deposits if households can hold state money instead. Status differs by country, and the current position of any central bank comes from that institution.

01Why it matters

If retail versions arrive, they would change what a bank deposit is for and what a payment reveals about you, which affects everyone who holds money, not just investors.

02The math, step by step

Say a household holds $5,000 in a commercial bank. That is a claim on the bank, protected by deposit insurance up to published limits. The same $5,000 held as a central bank digital currency would be a direct claim on the central bank, so deposit insurance would not be the mechanism protecting it.

Illustrative example. The amounts here are hypothetical, chosen to show how the math works, not real quoted rates or figures.

03What this is NOT

04Receipts

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