## Central Bank Digital Currencies: The Real Deal or Just a Cryptocurrency Remnant?

When it comes to digital money, it's no longer just about Bitcoin and Ethereum. Central banks around the world are now creating their own currencies, called **CBDC** or Central Bank Digital Currencies. This is a move by traditional financial systems to respond to the rise of cryptocurrencies and the changing ways humans use money.

### CBDC is "Official" Digital Money

Simply put, **CBDC is a digital currency issued and controlled by the central bank**. It is not issued by commercial banks or private entities but originates from the true monetary authority of each country. Behind CBDC, there are both "money" and a "payment system" supporting it, designed to make transactions faster, safer, and more transparent.

There are two main types of CBDC: **Wholesale CBDC** for interbank transactions, such as bank-to-bank transfers, and **Retail CBDC** for everyday consumer use. Thailand has experimented with Wholesale CBDC through the Inthanon project and is testing Retail CBDC in the Bang Khun Phrom project.

### CBDC vs Cryptocurrency vs Digital Money: What's the Difference?

**CBDC and Cryptocurrency** may seem similar—they are both digital currencies that could use blockchain technology—but they are quite different. CBDC is regulated and overseen by the central bank, which means its value is relatively stable and backed by the country's economic resources, making it hard to speculate on. Cryptocurrency, on the other hand, is created by private entities, highly volatile, and not maintained or backed by any authority. Its value fluctuates based on supply and demand, allowing for speculation.

**CBDC and Digital Money like PromptPay** differ in that CBDC is "money" issued directly by the central bank, such as the digital form of the Thai Baht. The underlying system may utilize blockchain technology, making the money "programmable." PromptPay or other digital money are merely "payment systems" created by private companies, operating with existing fiat money stored in institutions.

### Why Do Central Banks Need to Create CBDC?

The increasing use of digital money worldwide, along with rising transaction volumes, has led to more complex settlement issues. Cross-border payments, in particular, still take a long time and cost a lot. Cryptocurrencies are also just a fingertip away, providing people with alternatives to traditional financial systems.

Therefore, central banks are exploring ways to keep the "official" financial system viable and resilient by developing CBDC, which can:

- **Reduce costs**: No need to maintain old infrastructure; cross-border payments become easier
- **Increase speed**: Transactions can be settled instantly, without waiting days
- **Enhance security**: Clear verification makes money laundering and fraud more difficult
- **Offer choices**: Provide people with alternatives beyond cash, banks, or cryptocurrencies

### Where Are Countries Developing CBDC?

The leading countries are already making progress:

**Countries that have implemented CBDC:**
- **Jamaica**: Launched JAM-DEX in 2022, the first official CBDC (not using Blockchain)
- **Nigeria**: Introduced eNaira in 2021

**Major economies working on CBDC:**
- **China**: Testing Digital Yuan, with a circulation value of 83 billion yuan
- **India**: Preparing to launch Digital Rupee in 2023-2024
- **United States**: Conducting Project Hamilton with MIT to develop infrastructure
- **United Kingdom**: Planning to integrate CBDC into the existing financial system
- **Canada**: Studying CBDC to complement current systems
- **Sweden**: Developing e-Krona due to declining cash usage
- **Thailand**: Testing Wholesale CBDC and working on Retail CBDC in the Bang Khun Phrom project

Other countries like Australia, South Africa, Indonesia, Brazil, Peru, and Singapore are also planning.

### Who Needs to Adapt?

CBDC is not good news for everyone:

- **Financial infrastructure companies**: Must adapt to provide services beyond CBDC and improve capabilities
- **Commercial banks**: Need to decide which system to adopt, as costs may decrease
- **Cryptocurrency investors**: Should assess the impact, as CBDC might reduce demand for some cryptos, since people will have a more stable "official" alternative similar to crypto

### Summary

CBDC is not a new function but a **central bank trying to create its own digital money** in response to the rise of cryptocurrencies. It reflects how digital mechanisms can make payments more convenient. The arrival of CBDC is not far off; its form and speed depend on each country's decisions.