ECB proposes replacing the term ‘CBDC’ with ‘CBEM’

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Mirjan Hipolito

18.02.2025

ECB proposes replacing the term ‘CBDC’ with ‘CBEM’ — ECB wants to change the terms

The European Central Bank (ECB) has proposed abandoning the term 'CBDC' (Central Bank Digital Currency) and replacing it with 'CBEM' (Central Bank Electronic Money). This initiative is outlined in the regulator’s report titled 'Digital Money and Finance: A Critical Review of Terminology.'

According to the document, the rapid development of technology has led to the emergence of numerous new terms that are widely used but are 'often biased, confusing, or inconsistently applied.'

As a result, the ECB has suggested re-evaluating the etymology of key concepts, analyzing existing terminology, and implementing more precise definitions. The regulator believes this approach will help improve the understanding of new financial technologies and facilitate discussions on their potential benefits and applications.

Which terms does the ECB want to change?

One of the most problematic terms, according to the central bank, is 'CBDC.' The ECB argues that the word 'digital' should be replaced with 'electronic' to avoid confusion about whether retail CBDC refers to central bank money on a DeFi platform (which it does not). Additionally, the term 'currency' should be replaced with 'money,' as the phrase 'central bank money' is more widely accepted than 'central bank currency.'

The ECB also questions the term 'crypto-assets.' The regulator believes that this label should not apply to assets that merely utilize blockchain technology.

'For example, Bitcoin, as an unbacked asset, can be considered a crypto-asset, but a bond recorded on a blockchain is still a bond and should be referred to as a 'bond held on a DLT platform,'' the document states. Furthermore, the ECB suggests replacing 'crypto-assets' with 'virtual assets' or even 'virtual ledger entries' to emphasize the lack of real-world backing for such assets.

The ECB also argues that terms like 'smart contracts' and 'stablecoins' are misleading. The regulator asserts that a 'smart contract' is neither 'smart' nor a 'contract,' as it simply refers to code that executes financial transactions on a blockchain.

Similarly, 'stablecoin' is misleading because the term 'coin' (as in 'Bitcoin,' 'altcoin,' and 'memecoin') implies a bearer instrument, whereas these so-called 'coins' are merely recorded and transferred in a system-of-accounts database.** The ECB also highlights that algorithmic 'stablecoins' have proven to be unstable, making the term inaccurate and potentially deceptive.

The ECB's study aims to spark discussion and refine terminology in the field of digital money and decentralized finance. The regulator believes that using clearer, more precise language will improve the public’s understanding of these innovations and help shape their future applications.

Meanwhile, the European Central Bank continues to explore the possibility of conditional payments for the digital euro.

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