Abstract

The rapid evolution of digital technologies and financial innovations has brought digital currencies and Central Bank Digital Currencies (CBDCs) to the forefront of global economic policy debates. As societies transition towards increasingly digital financial ecosystems traditional banking systems monetary policy frameworks and regulatory institutions face new complexities regarding security privacy financial inclusion and monetary sovereignty. This research paper provides a comprehensive analysis of digital currencies their classifications underlying technologies and their policy implications with a particular emphasis on CBDCs. It investigates how digital currencies challenge existing regulatory structures influence monetary stability and reshape the fundamental dynamics between central banks commercial banks and consumers. The paper also highlights international CBDC developments including those by China Sweden the Bahamas and the European Union and explores how these models provide