Glossary

Artificial intelligence systems that operate with a certain level of autonomy and intentionality. Unlike generative AI systems, which only respond to specific prompts or tasks given by users, agentic AI systems are designed to take independent actions, pursue goals, or make decisions based on a set of objectives or desired outcomes. This type of AI can proactively seek information, adapt to changing environments, and perform tasks without direct human oversight.

A stablecoin that adjusts supply using algorithms to maintain price stability. An example of this is NuBits.

Software on a mobile device used to link the holder to a specific web page/service.

A connection between computers or computer programmes. It is a type of software interface, offering a service to other pieces of software. A document or standard that describes how to build such a connection or interface is called an API specification. The term API may refer either to the specification or to the implementation.

The theory and development of computer systems able to perform tasks that normally require human intelligence, such as visual perception, speech recognition, decision-making, and translation between languages.

Stablecoins that are backed by assets such as money (ie. central bank reserves, banknotes or bank deposits), commodities (eg. gold), or other cryptocurrencies. Since stablecoins are not covered by deposit insurance and central banks do not act as lender of last resort for them, to have confidence in them they need to be fully backed. The type of asset and the legal rights of the holder are key to whether there is confidence in the stablecoin, although, ulltimately, simple confidence or belief is also a significant factor in whether they are stable or not. The profitability of the asset to the provider and their own funding model is a part of assessing the stablecoin.

A process that uses a pair of related keys – one public and one private – to encrypt and decrypt a message and protect it from unauthorised use.

Something that is real, genuine, valid, of undisputed origin. Authentication is the process of confirming that a product, document or even person is authentic.

The process of determining that a product, document or even person is authentic.

An international financial institution owned by central banks that ‘fosters international monetary and financial cooperation and serves as a bank for central banks’.

A type of fixed-income security in which no ownership information is recorded and the security is issued in physical form to the purchaser. The holder of a bearer instrument is presumed to be the owner, and whoever is in possession of the physical bond is entitled to the coupon payments.

Large, well-established technology companies that provide financial products and services, or products very similar to these, and that can include crypto products.

Bitcoin is commonly referred to as a cryptocurrency, a digital means of exchange. It was developed by a set of anonymous authors under the pseudonym of Satoshi Nakamoto, and began operating in 2009 as a community project, without any relationship with or dependency on any government, state, company or body. The value of bitcoin is formed by a complicated system of mathematical algorithms and cryptography and it is not supported by any central bank or authority. Bitcoins are essentially accounting entries in a large database called a blockchain, which is unique but replicated in millions of computers connected to the internet. Bitcoins can be exchanged almost instantaneously for any currency and can be used for payment. The system has numerous pros and cons, and many central banks insist that bitcoin is not a currency but a highly speculative and high-risk asset. In reality it is reasonably quick and easy to buy cryptocurrencies but the exchanges make it harder and costlier to sell them.

A timestamped series of immutable records of data that are managed by a cluster of computers as a distributed ledger that is not owned by any single entity. The blocks of data are secured and bound to each other using cryptographic principles. A permissioned blockchain, defined in this glossary, can be owned by a single entity. For example, JPMcoin is owned by JPMorgan. There are now a wide range of examples of this type of blockchain.

Rules that dictate how computers in a network verify new transactions and add them to the blockchain database.

A short-range wireless technology standard used for exchanging data between fixed and mobile devices over short distances and building personal area networks.

CBDC accounts that are on the balance sheet of the central bank. The bank controls the ledger and is involved in the execution of retail payments.

An institution that manages the currency and operates the monetary policy of a state or formal monetary union. Central banks can also be tasked with supervising commercial banking systems. Central banks in most developed nations are institutionally independent from political interference.

The virtual form of a fiat currency. A CBDC is an electronic record or digital token of a country’s official currency. As such, it is issued and regulated by the nation’s monetary authority or central bank, and is a direct liability of that bank.

CBDCs held by the public at a central bank in individual bank accounts.

CBDC accounts that are on the balance sheet of the central bank, with private intermediaries handling retail payments and, possibly, opening accounts. The difference between hybrid and intermediate CBDCs relates to whether the central bank keeps a central ledger of all transactions.

CBDCs made available to the public. A general purpose CBDC can be used by the public or institutions.

A CBDC account that is not on the balance sheet of a central bank. Intermediaries hold the liability for the CBDC but are required to deposit 100% of the account at the central bank. Synthetic CBDs are not usually regarded as true CBDCs.

The value of the CBDC is held as a token. The token can be stored in a number of places, such as in an account, wallet, or card. This term can be hard to define at a technical level and some central banks are trying to get away from terms such as token- and account-based because they are so imprecise. There is actually no good definition, but rather many definitions that are conflicting. For example, many now say the bitcoin is not really a token, as it is possible to clone the bitcoin system and have identities attached to all the addresses, but nothing would change in the code. So is that a token or an account?

CBDCs that are first distributed to banks which then distribute them to individuals, much in the same way as cash. At each stage of the process, the CBDC is still a liability of the central bank. The core ledger is held by the central bank, but the private sector acts as payment service provider, delivering accounts and services to the public.

A CBDC issued and used for interbank settlements. It is not available to the public, only to financial institutions that are part of the central bank settlement system.

A liability of a central bank, including banknotes in circulation and deposits of other banks with the central bank.

A ledger (ie. record of financial transactions), kept in one place. Often as part of a closed system, ie. with limited and controlled access, to help safeguard the ledger from unauthorised access. RTGS (real-time gross settlement) systems are, typically, centralised.

On-demand access, via the internet, to computing resources – applications, physical servers, virtual servers, data storage, development tools, networking capabilities, and more – hosted at a remote data centre managed by a cloud services provider.

A system of words, letters, figures, or symbols used to represent certain information.

A financial institution which accepts deposits from the public and gives loans for the purposes of consumption and investment to make profit. It can also refer to a bank, or a division of a large bank, which deals with corporations or large/middle-sized business to differentiate it from a retail bank and investment bank. Commercial banks include private and public sector banks.

A government agency designated to implement a system, such as a tax stamp and track and trace solution.

Consensus is required for updates or transactions on blockchains. It refers to the need to validate new data before writing updates of information to the blockchain. Similar to the term ‘blockchain’, there are different types of consensus mechanisms. Early crypto consensus required agreement by the majority of relevant actors on the blockchain as to the status of the ledger, whereas more recent versions of blockchain use distributed consensus mechanisms, relying on a fewer number of nodes required for establishing consensus.

A digital representation of value or contractual rights, using some form of distributed ledger technology, which can be transferred, stored or traded electronically using cryptography. Cryptoassets are said to be decentralised since the issuance and transfer of the currency is not controlled by any central bank or other actor. Examples of cryptoassets include NFTs and cryptocurrencies.

Any person whose occupation or business is the provision of one or more cryptoasset services to third parties on a professional basis. Cryptoasset services include the provision of an exchange, including automated processes, enabling the exchange of cryptoassets for money, or of one cryptoasset for another cryptoasset. A CASP also offers custodian services, eg. through the provision of a custodial wallet to hold the cryptocurrencies.

A subset of asset-referenced tokens which reference their value in relation to other cryptoassets.

A number generated by an algorithm which is then recorded in a distributed ledger linked to a digital key held by the owner. Cryptocurrencies are not issued by a government and are not backed by assets. Their value lies in their scarcity, with a limit on the quantity created.

A place where cryptocurrencies are bought and sold.

A method of protecting information and communications through the use of codes.

The official means of payment of a state/monetary union recognised as such by monetary laws.

Crime committed to steal or defraud people of electronic money, or crypto-assets, online.

An umbrella term for the provision of financial applications that is achieved directly between two parties without the need for financial intermediaries, and that often uses technology based on distributed ledgers and ‘smart contracts’.

A ledger system, recording transactions and holdings, which is held in multiple places and simultaneously updated. See Distributed ledger technology for a description of the technical infrastructure on which distributed ledger systems can be based.

The translation of a code into a format that is more generally understood.

The process of converting encrypted data back to its original form, often with the use of a covert key or password.

A permissioned blockchain-based payment system proposed by the American social media company Facebook, Inc. The plan also includes a private currency implemented as a cryptocurrency. Originally called Libra.

The storage, transmission, manipulation and reproduction of data, images, sounds, etc., by a process that uses groups of electronic bits represented as 1 or 0.

Anything that exists in binary data which is self-contained, uniquely identifiable, and has a value or right to use. Data that do not possess that right are not considered assets.

Name of China’s CBDC. See also e-yuan/e-CNY.

Informal term for a US central bank digital currency.