<h1 class="ql-align-center">Central bank digital currency (CBDC)</h1> <h2>Context:</h2> <ul><li>The Reserve Bank of India has been working on a phased implementation strategy for a CBDC and the pilot may be launched by the end of this year.</li></ul><h2> </h2><h2>About:</h2> <ul><li>A Central Bank Digital Currency (CBDC) is simply the digital form of a country's fiat currency. Instead of printing paper currency or minting coins, the central bank issues electronic tokens.</li></ul> <ul><li class="ql-indent-1">This token value is backed by the full faith and credit of the government.</li></ul> <ul><li>The concept of CBDCs was&nbsp;directly inspired by bitcoin but it is different from decentralised virtual currencies and crypto assets,&nbsp;which are not issued by the state and lack the legal tender status</li></ul> <h2>Fiat Currency:</h2> <ul><li>Fiat currency&nbsp;is a government-issued currency that is not backed by a commodity such as gold.</li></ul> <ul><li>Fiat money gives central banks greater control over the economy because they can control how much money is printed.</li></ul>