Digital Rupee or Central Bank Digital Currency (CBDC), as the name suggests, is a digital form of currency notes issued by a central bank
What is CBDC?
What is CBDC?
It is akin to paper currency (i.e. the Indian rupee) and is exchangeable one-to-one with the fiat currency
The Reserve Bank of India (RBI) has rolled out digital rupee as a pilot project for the wholesale segment on November 1
RBI launches digital rupee on pilot project
CBDC will host all benefits that cryptocurrencies and digital payments offer
What are the advantages of CBDC?
Similar to digital currency, RBI’s digital rupee can’t be damaged or lost, physically. Thus, it’s lifetime is indefinite
What are the advantages of CBDC?
Since CBDC will be governed by a central authority, there are fewer risks involved in terms of volatility unlike other digital currencies
What are the advantages of CBDC?
As per RBI, digital rupee is expected to make inter-bank market more efficient. Settlement in central bank money would reduce transaction costs, pre-empting the need for collateral to mitigate settlement risk
What are the advantages of CBDC?
The concept of CBDC was first announced in FY23 budget by Finance Minister Nirmala Sitharaman who said that RBI would roll out the digital equivalent of the rupee this fiscal
Origin of CBDC
RBI has become the world’s first major central bank to start a pilot project with its own digital currency
RBI’s digital currency initiative
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