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Central bank digital currencies (CBDCs) are an electronic form of money that consumers and businesses hold with their country’s central bank. Sometimes described as ‘digital banknotes’, CBDCs could lead to financial innovation and may mitigate risks arising from new forms of private money such as cryptocurrencies. While there are as yet no concrete plans to introduce a CBDC in the UK, the Bank of England is investigating possibilities.

This briefing sets out some of the main ideas involved, particularly from a UK perspective. It describes how a CBDC might work in practice and highlights some of its potential benefits and challenges.


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