CFA Level I · CFA Level I Exam · Introduction to Digital Assets
Compared with a cryptocurrency such as Bitcoin, a central bank digital currency (CBDC) is most likely to:
A CBDC is most likely a direct liability of the central bank denominated in the national currency. It is digital fiat money under monetary authority control, unlike cryptocurrencies, which often have protocol-fixed supply and are validated by decentralized participants in permissionless networks.
- Ahave a fixed maximum supply set by its protocol
- Bbe a direct liability of the central bank denominated in the national currencyCorrect
- Cbe validated by anonymous miners through a permissionless network
Explanation
A CBDC is digital fiat money issued by the central bank, so it is a liability of that bank and denominated in the national currency. A fixed supply and permissionless mining are features of Bitcoin-style cryptocurrencies, not CBDCs.
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