RBI Digital Currency: A new way of transaction
CBDCs are presently in the hypothetical stage, with some proof-of-concept programs, although a survey in early 2020 found that more than 80% of central banks were studying the subject.
New Delhi: The Reserve Bank of India is on for a major change and towards the new way of transaction. RBI is preparing to bring digital currency, which will change the way of transaction, in order to curb the increasing expenditure on black money and the printing of currency.
The RBI is looking forward and soon an Inter-Departmental Committee of RBI is going to take a decision on this. According to the sources, RBI suggests that the central bank is considering bringing digital currency (CBDC). The central bank has also formed an interdepartmental committee to study the possibilities of the digital currency and decide the guidelines, which are to be decided by the CBDC.
RBI mentioned, “Innovations are changing the payments space rapidly. This has made central banks around the world examine whether they could leverage on technology and issue fiat money in digital form."
About Central Bank Digital Currency
The phrase "central bank digital currency" (CBDC) has been used to refer to various proposals involving digital currency issued by a central bank. Central bank digital currencies also called digital fiat currencies or digital base money.
The present concept of CBDCs was directly inspired by Bitcoin, but CBDC is different from virtual currency and cryptocurrency, which are not issued by the state and lack the legal tender status declared by the government. Proposed implementations may not even use any sort of distributed ledger.
CBDCs are presently in the hypothetical stage, with some proof-of-concept programs, although a survey in early 2020 found that more than 80% of central banks were studying the subject.
CBDC is a legal tender and a central bank liability in digital form denominated in a sovereign currency and appearing on the central bank's balance sheet. It is in the form of electronic currency which can be converted or exchanged at par with similarly denominated cash and traditional central bank deposits.
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