What India’s CBDC Plans Need 

Despite the uproar over the future of private cryptocurrencies, many countries are launching their own central bank digital currency, or CBDC. After several flip-flops over the issue, the Indian government seems to be moving in the same direction, with the listing of the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, in the ongoing winter session of Parliament.

But in the absence of details, the Bill leaves a lot of questions unanswered—how different will it be from electronic transfer of money? Will it be re-engineered decentralised money? Who would be able to access the data?

Some experts say CBDC will work like digital wallets, but on the blockchain. “Transactions of all currency units can be tracked on the ledger with no ability to modify the past, leading to transparency and easy bookkeeping. It is basically a technology-led exchange of Indian rupee with RBI oversight on the supply, as well as usage,” says Vikram Subburaj, Co-founder and Chief Executive Officer of Giottus Cryptocurrency Exchange.

Can the central bank digital currency hurt demand for private sector wallets? “If CBDC is launched, the need for private rupee-based wallet providers will be obviated,” says Subburaj.

The catch here is that no country has implemented a CBDC-based economy yet. So, there is no blueprint. The general consensus is that it could take some load off traditional banking networks and help in the financialisation of the country by reaching out to the unbanked population. But there is a long road ahead.