Digital currencies, such as Bitcoin, are often seen as a threat to central banks and the traditional financial system.

However, many central banks around the world are now exploring the use of blockchain technology to create their own digital currencies, which are sometimes referred to as central bank digital currencies (CBDCs).

CBDCs would be backed by the issuing central bank and would be used to facilitate transactions, much like physical cash. This would allow central banks to retain control over the money supply while still taking advantage of the efficiency and security of blockchain technology.

Some examples of CBDCs that are currently being developed include the Digital Yuan in China.