Glossary

Informal term for a European central bank digital currency.

A type of electronic signature that protects a document or authenticates a device by encryption with digital codes that are difficult to duplicate or decrypt.

Can be in the form of an app, card or universal access device. It refers to a place where electronic money is held in token form.

A reduction in the use of intermediaries in order to connect participants in a transaction directly. In terms of central bank digital currencies (CBDCs), if the public is able to have an account and hold CBDC funds at a central bank, then there is less or even no need for it to hold private money in a commercial bank account. The services of the commercial bank account have therefore been disintermediated.

Technological infrastructure and protocols that allow simultaneous access, validation, and record updating in an immutable manner across a network spread over multiple entities or locations, with no central hub. Generally associated with blockchain systems.

A potential risk in a digital cash scheme in which the same single digital token can be spent more than once. Unlike physical cash, a digital token consists of a digital file that can be duplicated or falsified. 

An electronic authentication technique that is a legal substitute for a handwritten signature.

The conversion of information or data into a code.

The conversion of data or information into a format that requires a key or password to access the data.

The name of a popular cryptocurrency operating on the Ethereum network.

Websites where people buy, trade and hold cryptocurrencies.

Part of the qualification process to receive a tender document. The buyer (eg. a government organisation) is requesting a provider to express an interest in providing goods and services for a project.

Unit of exchange used in China’s DCEP system.

A currency established as money, often by government regulation, without an intrinsic value, unlike a precious metal or a piece of merchandise. A development step from the use of commodity money, whose value comes from the commodity from which it is made (such as gold, silk, cigarettes).

A process by which individuals and businesses can access appropriate, affordable, and timely financial products and services. While it is recognised that not all individuals need or want financial services, the goal of financial inclusion is to remove all barriers, both on the supply side and demand side. Supply side barriers stem from financial institutions themselves. They often indicate poor financial infrastructure, and include lack of nearby financial institutions, high costs to opening accounts, or documentation requirements. Demand side barriers refer to aspects of the individual seeking financial services and include lack of proof of identity, financial illiteracy, lack of financial capability, or cultural or religious beliefs that impact their financial decisions.There is growing scepticism from some experts about the effectiveness of financial inclusion as an economic and social development tool.

An umbrella term describing technology-enabled innovation in financial services, regardless of the nature or size of the entity providing the services, which could result in new business models, applications, processes and products.

Where a second version of a database is created.

A hardware design aspect that defines and prescribes the size, shape, and other physical specifications of components. A form factor may represent a broad class of similarly sized components, or it may prescribe a specific standard.

An item is fungible if one unit of the item is equivalent to another unit of the same item of the same quality at the same time, place, etc. Fungibility allows an item or asset to be interchanged with other individual goods or assets of the same type. Fungible assets simplify exchange and trade processes, as fungibility implies equal value between assets.

A subset of artificial intelligence that focuses on creating new content, such as text, images, audio, or video, by learning patterns from existing data. Common examples include language models like GPT (which powers ChatGPT) or image generation models like DALL-E. Unlike agentic AI, generative AI operates under user prompts and can’t perform tasks on its own initiative.

Blockchain is immutable and transparent. When data is recorded on the blockchain network, it becomes visible to other participants and cannot be changed. All blocks are connected to each other. No-one can delete, edit, revise, rewrite, update or undo, any of the blocks.

The Bank for International Settlements has set up innovation hubs to explore and exploit the rapid technological changes affecting central banking. The hubs are in Hong Kong SAR, Singapore, Sweden, Switzerland, UK, Germany, France, Canada, and the bank has a strategic partnership with the Federal Reserve System in New York.

The balancing off of bank funds held at a central bank at a given agreed moment at the end of a trading period. If Bank A’s customers have transferred more money to Bank B than Bank B’s customers have transferred to Bank A, then Bank A needs to transfer appropriate funds to even out the balance.

An independent, non-governmental international organisation with a membership of 165 national standards bodies. Through its members, ISO brings together experts to share knowledge and develop voluntary, consensus-based, market-relevant international standards that support innovation and provide solutions to global challenges.

A network of physical objects that are embedded with sensors, software, and other technologies for the purpose of connecting and exchanging data with other devices and systems over the internet.

The ability of different information systems, devices and applications to access, exchange, integrate and cooperatively use data in a coordinated manner, within and across organisational, regional and national boundaries.

A system of encryption whereby a ‘key’ is required to decode a message. The key is usually a handheld device which renders meaningful that which was previously unintelligible. Public keys may be disseminated widely, whereas private keys are restricted to certain individuals, thereby limiting access to the encrypted information. See also Public key infrastructure.

Money that is legally valid for the payment of debts and must be accepted for that purpose when offered. Each jurisdiction determines what is legal tender, but essentially it is anything that when offered (‘tendered’) in payment of a debt extinguishes the debt. There is no obligation on the creditor to accept the tendered payment, but the act of tendering the payment in legal tender discharges the debt.

Central banks usually fulfil the function of ‘lender of last resort’. To ensure financial stability, the central bank provides emergency credit to financial institutions that are struggling financially and near collapse, for example if they no longer have other available means of borrowing, and where their failure to obtain credit would dramatically affect the economy. An example of when this is needed is if bank account holders withdraw funds at a level and in a timespan which means the bank cannot liquidate assets fast enough to match the demand, creating what is known as a ‘run on the bank’.

An umbrella term for solving problems for which development of algorithms by human programmers would be cost-prohibitive, and instead the problems are solved by helping machines ‘discover’ their ‘own’ algorithms, without needing to be explicitly told what to do by any human-developed algorithms. While artificial intelligence encompasses the idea of a machine that can mimic human intelligence, machine learning does not. Machine learning aims to teach a machine how to perform a specific task and provide accurate results by identifying patterns.

The ability of a computer to see. The technology and methods used to provide imaging-based automatic inspection and analysis for such applications as automatic inspection, process control, and robot guidance, usually in industry.

The process by which new cryptoassets enter into circulation and new transactions are confirmed by a blockchain network. Mining is performed using sophisticated hardware that solves a complex computational maths problem. When a problem is solved, the miner is awarded the next block of cryptoassets and the process recommences with a trickier problem. Computers verify transactions on the blockchain ledger in exchange for a reward based in cryptocurrency.

An alternative to mining, the process by which assets are written to a blockchain, where the writer of the asset is a pre-determined trusted entity. In certain use cases, such as an ecosystem of banks, minting is preferred due to performance and power consumption requirements.

Monetary law is the legislative and regulatory framework that provides the legal foundations for the use of monetary value in society, the economy and the legal system.

From the Latin word ‘moneta’, money is any item that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular region, country or socio-economic context. Its onset dates back to the origins of humanity and its physical representation took on very varied forms until the appearance of metal coins. The banknote, a typical representation of money, appeared in the 17th century, and has since experienced great development and growth. Currently, electronic systems allow payments without the need to deliver physical money (banknotes or coins). Money is considered to have three basic functions: unit of account, medium of exchange and store of value.

The illegal process of making large amounts of money generated by a criminal activity, such as drug trafficking or terrorist funding, appear to have come from a legitimate source. The money from the criminal activity is considered dirty, and the process ‘launders’ it to make it look clean

In general, refers to the central banks of different countries that are part of a currency union.

A method of wireless data transfer between two electronic devices over a distance of 4cm or less.

When the nominal interest rate drops below 0% for a specific economic zone. This effectively means that banks and other financial firms have to pay to keep their excess reserves stored at the central bank, rather than receiving positive interest income. This is hard to enforce while people have the option to hold funds in other assets, particularly physical cash.

Computers in a cryptocurrency network.

A unit of data stored on a blockchain digital ledger that certifies a digital asset to be unique and therefore not interchangeable Used to represent ownership of real-world unique items like art, video clips and music – unlike money or bitcoin, which are fungible.

In computing and telecommunications, the payload is the part of transmitted data that is the actual intended message.

Documents that can be used legally to effect payment in commercial banks in book money or currency. For example, cheques, bills of exchange, promissory notes.

A payment platform or network that moves money from payer to payee. Credit card rails are the credit card payment system.

Traditionally, PSPs have provided shops with online services for accepting electronic payments by a variety of payment methods including credit card, bank-based payments such as direct debit, bank transfer, and real-time bank transfer based on online banking. Typically, these are a software-as-a-service model and form a single payment gateway for clients (merchants) to multiple payment methods. For central bank digital currencies, PSPs are likely to facilitate the acceptance and use of CBDCs for payments.

Peer-to-peer computing or networking is a distributed application architecture that partitions tasks or workloads between peers. Peers are equally privileged, equipotent participants in the application. They are said to form a peer-to-peer network of nodes.

An additional blockchain security system that maintains an access control layer to allow certain actions to be performed only by certain identifiable participants.

The fraudulent practice of sending emails or other messages purporting to be from reputable companies in order to induce individuals to reveal personal information, such as passwords and credit card numbers.

A device allowing the use of payment cards at a physical (not virtual) point of sale. The payment information is captured either manually on paper vouchers or by electronic means.

The holding of banknotes/CBDCs as a store of value, for saving purposes or as a precaution for uncertainties.