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“Government digital currency” usually means a central bank digital currency (CBDC): digital money issued by a country’s central bank and recorded as a liability of that central bank. The issuer—not the fact that money appears in an app, or the technology used to move it—is what defines a CBDC.
What does government digital currency mean?
The phrase is commonly used to refer to a CBDC, though it is not one universal legal term. The Federal Reserve’s 2022 discussion paper defined a CBDC for its purposes as “a digital liability of the Federal Reserve that is widely available to the general public.” The IMF gives a broader definition: “A CBDC is a digital form of money issued and regulated by a central bank.” Neither wording should be treated as a legally binding definition for every country.
In practical terms, a CBDC is a digital form of sovereign money. Its holder has a claim on the central bank, rather than on a commercial bank or private company. The Federal Reserve explains its definition on its CBDC information page; the IMF definition appears in its 2024 report on CBDCs in the Middle East and Central Asia.
Retail and wholesale CBDCs
CBDCs are often grouped by who may use them and what they are for:
| Type | Who can use it | Typical purpose | Possible access model |
|---|---|---|---|
| Retail CBDC | The public, including households and businesses | Everyday payments | A digital wallet accessed through a phone app, card, or another electronic device |
| Wholesale CBDC | Financial institutions | Large-value payments, clearing, or interbank settlement | Restricted institutional access |
These are broad categories, not a claim that every country has introduced either kind. The IMF describes the retail and wholesale distinction in its initial considerations on CBDC and its 2024 regional report.
How is a CBDC different from money in a bank account?
A bank-account balance is already digital, but it is generally a liability of the commercial bank holding the account. A CBDC, by contrast, is a liability of the central bank. That difference in issuer and claim is more important to the definition than whether a balance is shown in a digital wallet.
| Balance or instrument | Issuer or responsible institution | What the holder’s claim is on |
|---|---|---|
| CBDC | Central bank | The central bank |
| Commercial-bank deposit | Commercial bank | The commercial bank |
The Federal Reserve’s January 2022 discussion paper and the BIS Financial Stability Institute’s CBDC executive summary explain this central-bank-versus-private-money distinction.
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No. CBDC describes who issues the money and whose liability it is; it does not prescribe a particular technical system. A CBDC is not automatically a cryptocurrency, and using a blockchain or distributed ledger would not, by itself, make a digital asset a CBDC. Technical designs can vary.
Likewise, a private digital payment balance or stablecoin is not a CBDC simply because it is digital or can be used to pay. The relevant question is whether the central bank issued it as its own liability. The BIS Financial Stability Institute’s summary discusses CBDCs in relation to private forms of money, while the IMF’s survey of retail CBDC research notes that definitions and taxonomies have not always been uniform.
Does every CBDC work the same way?
No. The core definition concerns central-bank issuance and liability, but details such as eligibility, intermediaries, privacy protections, legal-tender status, and operating arrangements depend on the jurisdiction and design. A wallet may be one way to access a retail CBDC; it is not the issuer of the currency.
For example, the Federal Reserve’s 2022 paper discussed possible U.S. design principles, including privacy protection and intermediated access, as preliminary analysis—not as a specification for an adopted U.S. system. Legal treatment also varies by jurisdiction; the IMF addresses these questions in Selected Legal Considerations for Central Bank Digital Currencies. Do not assume that all CBDCs are anonymous, programmable, interest-bearing, legal tender, blockchain-based, or currently available.
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The definition alone does not establish whether a particular country has launched a public CBDC. A proposal, pilot, and live system are different stages, and availability and legal status must be checked against current information from that jurisdiction’s central bank or government. The Federal Reserve’s CBDC page has stated that it had made no decision on whether to pursue or implement a U.S. CBDC; consult that page for the Fed’s current position rather than treating the statement as a new 2026 announcement.
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