There are indications that India may be looking towards launching a Central Bank Digital Currency (CBDC). On the first day of Parliament바카라s Winter Session on November 29, the finance ministry confirmed that it has taken a proposal from the Reserve Bank of India (RBI) for an amendment to the Reserve Bank of India Act, 1934 to improve the scope of the definition of 바카라bank note바카라 to include currency in digital form.
바카라Central Bank Digital Currency (CBDC) is introduced by a Central Bank... RBI has been examining use cases and working out a phased implementation strategy for the introduction of CBDC with little or no disruption,바카라 Pankaj Chaudhary, Minister of State for Finance, stated in a written reply to a question in Lok Sabha.
What Is CBDC?
CBDC refers to the digital form of a country바카라s fiat currency, which is issued by the central bank of the country. Though it is in digital form, it can be exchanged with the fiat currency of the country. This money is a liability of the central bank.
Transactions are recorded in a centralised ledger and central banks retain full control oversupply. According to a report by the Bank for International Settlements (BIS), CBDC enjoys a combination of factors바카라it has universal access, it is in an electronic form and has the backing of a central bank.
How Is CBDC Different From Cash?
The main difference is that CBDC exists in a digital form. This means it offers the same convenience and usage as cashless payment instruments that we use these days, such as credit transfers, direct debits, card payments and more. In this sense, it represents a direct claim on a central bank, rather than a liability of a private financial institution.
How Is CBDC Different From Stable And Crypto Coins?
Cryptocurrencies are independent digital currencies that run without predetermined value or backing, such as Bitcoin (BTC) or Ethereum (ETH). In contrast, CBDC has the backing of central banks. For example, China바카라s proposed CBDC is digital yuan (e-CNY). In India, RBI has given the name 바카라Digital Rupee바카라 to the proposed CBDC
Stable coins too are backed, but by private entities. For example, Tether (USDT), USD Coin (USDC) and Facebook-backed Diem (earlier known as Libra) are all pegged to the US dollar.
Why Do Central Banks Want CBDC?
One of the major reasons to move towards CBDC is to counter the volatility and unaccountability of cryptocurrencies as CBDCs are issued and regulated by the country바카라s central bank, which is the main monetary authority.
At the same time, CBDCs will retain the advantages of being digital such as lower printing cost, reduced settlement risk, avoidance of time zone issues, and cost-effective globalisation of payment systems, according to atlanticcouncil.org.
Does India Need CBDC?
T. Rabi Sankar, Deputy Governor of RBI, said in a speech in July 2021, 바카라RBI is currently working towards a phased implementation strategy and examining use cases that could be implemented with little or no disruption.바카라
바카라India바카라s high currency to GDP ratio holds out another benefit of CBDCs. To the extent large cash usage can be replaced by CBDCs, the cost of printing, transporting, storing and distributing currency can be reduced,바카라 Sankar said in his speech. He further noted that the introduction of CBDC could lead to a more robust, efficient, trusted, regulated and legal tender-based payments option.
Global Move
It is not just India that is mulling a CBDC; other countries are on the same mission. The boost in digitalisation has triggered crypto-mania around the world, raising concern among all central banks regarding the lack of accountability and regulations in cryptocurrencies. This has ignited the need to have a 바카라regulated바카라 digital currency, the CBDC. China, the Bahamas, Sweden and the European Union are piloting their currency systems through CBDC, according to atlanticcouncil.org.
A BIS survey of January 2021 found that nearly 86 per cent of the central banks were actively engaged in researching CBDC, while 60 per cent were testing the underlying technology and 14 per cent were already in the pilot-project phase.
