What is CBDC
A central bank digital currency (CBDC) is money issued by a central bank in digital form, so the holder has a direct claim on the central bank rather than on a commercial bank.
It is the same national currency as banknotes, not a new currency. A digital rupee would be worth exactly one paper rupee.
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Formal definition and edge cases
In central-bank and research publications, a CBDC is a digital liability of the central bank, denominated in the national unit of account, that is available for payments. Several distinctions follow from this definition:
- Retail vs wholesale. A retail CBDC is for the public and businesses. A wholesale CBDC is for banks and financial institutions settling with each other. Bank reserves held at the central bank are already digital central-bank money, but only banks can use them.
- Account-based vs token-based. In an account-based design, identity is verified and balances are records in a ledger. In a token-based design, the holder proves ownership of a digital token, closer to how cash works. A CBDC does not have to use blockchain.
- Not a bank deposit or e-money. The rupees in a bank account or a mobile wallet are a claim on the bank or wallet provider. A CBDC is a claim on the central bank.
- Not crypto or a stablecoin. Bitcoin and altcoins have no issuer that backs them with the national currency. A stablecoin is issued by a private company. Neither one is a CBDC.
- Design choices. These include whether the CBDC pays interest, whether holdings are capped, and how much privacy users have. All of them affect how much money could move out of banks.
Worked example (hypothetical)
Sara keeps rupees in three forms: banknotes at home, a balance in her bank account, and a balance in a hypothetical retail CBDC wallet.
| Form | Who owes her the money | If her bank fails |
|---|---|---|
| Banknotes | Central bank | Unaffected |
| Bank deposit | Her commercial bank | Depends on deposit protection and recovery |
| CBDC balance | Central bank | Unaffected |
The amount and currency are the same in all three forms. What changes is the counterparty, meaning the party that owes the money. This is why economists discuss whether a CBDC could speed up a bank run. Depositors could move funds from banks to central-bank money with a few taps. Holding caps and zero interest are the usual ways a design tries to limit this.
CBDC Pakistan and the "digital rupee"
"Digital rupee" is the name used in news and policy discussions for a possible Pakistani retail or wholesale CBDC. The status, timing and design of any such project are set by the State Bank of Pakistan. Check its official publications for the current position rather than relying on news summaries.
Where you see the term
- Central-bank speeches, monetary policy reports and payment-system strategies.
- News on fundamental analysis topics such as payments, banking stability and dollarization.
- Crypto news feeds, where CBDCs are often compared with stablecoins and DeFi.
A CBDC is not an instrument you trade on MetaTrader. Price moves in crypto CFDs are a separate subject. Leveraged CFD trading can lose money fast.
Related terms
Frequent questions
What is CBDC in simple words?
It is digital cash issued directly by a central bank. It is worth the same as notes of the same currency.
Is a CBDC the same as cryptocurrency?
No. A CBDC is issued and backed by a central bank in the national currency. Cryptocurrencies have no such issuer.
Is money in my bank app already a CBDC?
No. A bank or wallet balance is a claim on that private institution, not on the central bank.
Does Pakistan have a digital rupee now?
Check the State Bank of Pakistan's official announcements for the current status.
Would a CBDC change the PKR exchange rate?
It is the same currency, so a digital rupee and a paper rupee have the same exchange rate. Effects on capital flows and policy are discussed in research, but they depend on the design.