Ilias Saidzada | 08.11.2025
Central Bank Digital Currency
Money is changing faster than ever before. Not long ago, people mainly paid with cash or cards. Now, with mobile banking, PayPal, and cryptocurrency, most of our money is digital. But there is a new concept that would completely revolutionise how we use money, the Central Bank Digital Currencies, or CBDCs.
A CBDC is essentially a digital version of a country’s currency, both created and controlled by the central bank in each country. It would be like having digital cash which is backed by the government itself, and not by a private business like a bank or a payment app. For example, the US could release a “digital dollar,” whilst China is already testing its own version, called the digital yuan.
So, why would the government want to create digital money in the first place? One major reason is how convenient I could be and the speed it would work. CBDCs could make payments significantly cheaper and faster, especially with payments across borders. Sending money overseas today takes days and has high fees, but with the CBDC, it could happen immediately, with little to no delay. Another benefit is financial inclusion; people without bank accounts could still use digital money through an app from the central bank.
However, there can be serious concerns. The biggest of which is privacy. If all digital money were to be managed by one authority, that could mean the government could see every transaction made. Critics argue that this could lead to financial surveillance, giving governments too much control. On the other hand, supporters say it can lead to a reduction in crime rates and tax evasion since every payment would be traceable.
There’s also the problem of how CBDCs would affect the regular banks. If people were to move their money into digital wallets owned by the government, instead of using traditional accounts, banks would have less money to lend, which could impact the economy.
Still, many countries are experimenting and exploring the idea. The European Central Bank, for instance, is developing a digital euro, and the U.S. Federal Reserve is researching how a digital dollar might work. It’s clear that the world is moving toward a more digital financial system; the question is just how far we’ll go.
In the end, CBDCs could be the next major step in the evolution of money. Whether they bring more freedom or more control depends on how they’re designed. Either way, the future of money looks more digital and much closer than most people realise.
Sources:
The Federal Reserve Board https://www.federalreserve.gov/cbdc-faqs.htm?
International Monetary Fund https://www.imf.org/en/topics/digital-payments-and-finance/central-bank-digital-currency/virtual-handbook?
World Economic Forum — article “What are Central bank digital currencies (CBDCs)?" https://www.weforum.org/stories/2023/10/what-are-central-bank-digital-currencies-advantages-risks/
Deloitte - "An introduction to central bank digital currencies (CBDCs)” https://www.deloitte.com/ng/en/Industries/financial-services/perspectives/cbdc-central-bank-digital-currency.html?
A CBDC is essentially a digital version of a country’s currency, both created and controlled by the central bank in each country. It would be like having digital cash which is backed by the government itself, and not by a private business like a bank or a payment app. For example, the US could release a “digital dollar,” whilst China is already testing its own version, called the digital yuan.
So, why would the government want to create digital money in the first place? One major reason is how convenient I could be and the speed it would work. CBDCs could make payments significantly cheaper and faster, especially with payments across borders. Sending money overseas today takes days and has high fees, but with the CBDC, it could happen immediately, with little to no delay. Another benefit is financial inclusion; people without bank accounts could still use digital money through an app from the central bank.
However, there can be serious concerns. The biggest of which is privacy. If all digital money were to be managed by one authority, that could mean the government could see every transaction made. Critics argue that this could lead to financial surveillance, giving governments too much control. On the other hand, supporters say it can lead to a reduction in crime rates and tax evasion since every payment would be traceable.
There’s also the problem of how CBDCs would affect the regular banks. If people were to move their money into digital wallets owned by the government, instead of using traditional accounts, banks would have less money to lend, which could impact the economy.
Still, many countries are experimenting and exploring the idea. The European Central Bank, for instance, is developing a digital euro, and the U.S. Federal Reserve is researching how a digital dollar might work. It’s clear that the world is moving toward a more digital financial system; the question is just how far we’ll go.
In the end, CBDCs could be the next major step in the evolution of money. Whether they bring more freedom or more control depends on how they’re designed. Either way, the future of money looks more digital and much closer than most people realise.
Sources:
The Federal Reserve Board https://www.federalreserve.gov/cbdc-faqs.htm?
International Monetary Fund https://www.imf.org/en/topics/digital-payments-and-finance/central-bank-digital-currency/virtual-handbook?
World Economic Forum — article “What are Central bank digital currencies (CBDCs)?" https://www.weforum.org/stories/2023/10/what-are-central-bank-digital-currencies-advantages-risks/
Deloitte - "An introduction to central bank digital currencies (CBDCs)” https://www.deloitte.com/ng/en/Industries/financial-services/perspectives/cbdc-central-bank-digital-currency.html?
