Major central banks worldwide are trying to come up with their version of a central bank digital currency (CBDC) and introduce it in their economies. CBDCs refer to a virtual version of country's official currency CBDCs like a virtual dollar. Two types of CBDCs currently exist; wholesale CBDCs and retail CBDCs. Wholesale CBDCs rely on banking and financial institutions, whereas retail CBDCs transfer the digital currency directly to consumers. They both could be used for various purposes by individuals, businesses, and financial institutions to store value, facilitate flows of money, and promote payment efficiency. Some countries like the Bahamas (Sand Dollar) and Nigeria (eNaira) have already issued CBDCs, and it is estimated that CBDCs will be available for 20% of the world's population by 2024.

1. What factors could have led to the introduction of central bank digital currency?
2. What differentiates a CBDC from a cryptocurrency? Your answer needs to contain at least three arguments.

3. What are your thoughts on the future of banking institutions? Would they be required to make any substantial changes?
4. What could be some drawbacks of CBDCs?

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