Centralized digital currency is common in modern culture. They are governed by a centralized governance organization that does not take into account trades. Examples of centralized digital money include air miles, digital wallets, central bank digital money, and various types of customer loyalty points.
Loyalty points and other centralized digital currencies have an impact on the statement of financial position because they are first recognised as a contract liability by the issuer under IFRS. When a customer redeems loyalty points, the company gains revenue while reducing contract liabilities.

A centralized digital currency is a digital form of money issued and controlled by a central authority, typically a government or central bank. Unlike decentralized cryptocurrencies, like Bitcoin, centralized digital currencies have a single issuing body responsible for regulating and maintaining the currency. Central Bank Digital Currencies (CBDCs) are a prominent example, where central banks issue digital money as a secure, stable alternative to cash.

Centralized digital currencies leverage blockchain or similar technologies, but they’re tightly regulated and monitored, providing transparency, reducing fraud, and allowing for efficient monetary policy control. They aim to enhance the efficiency of the payments system, reduce transaction costs, and promote financial inclusion while preserving the oversight and stability associated with traditional fiat money.