Hi Readers,
Wishes for a Happy New Year 2023!
A very common question being asked about the digital rupee is whether it’s a cryptocurrency.
While it shares some similar fundamental philosophies and technologies, it's not the same. For example:
- In contrast to cryptocurrencies, one digital rupee is going to be equal to one physical rupee. Hence, it is pegged in value the same way that the physical rupee is.
- Digital Rupee is also issued, reviewed, approved, recorded and validated by the RBI.
- It is not a commodity, claim on commodity, or a digital asset
- Importantly, it is not de-centralised.
What does it mean to all of us?
CBDC is set to be the next big interesting innovation for the Indian economy. It brings the best of the different worlds of UPI, fiat currency and blockchain technology. Some benefits we can expect are:
- Ease of UPI transfers while having the stability of fiat currency and anonymity of crypto (for retail transactions up to a specific limit, yet to be decided).
- Combination of public and private keys to further boost security.
- Offline functionality to be made available in the near future.
- Exchange of CBDC of other countries for international travellers once more countries release their own. All that at no extra cost.
- Most importantly, it will be exempt from the 30% tax burden that crypto bears.
Are there other countries do have CBDCs?
Several countries have already released their own CBDCs, like:
- The Bahamas
- Nigeria
- Dominica
- Montserrat
- Antigua and Barbuda
- Saint Lucia
- St. Kitts and Nevis
Apart from these, there are also a few prominent countries aiming to launch their own CBDCs soon:
Russia has already completed initial full-cycle transactional trials of the Digital Ruble.
China is planning to launch the Digital Yuan (symbol: eCNY) soon as well.
Big Talk- Big Impact?
CBDC is proving to be quite successful amongst players dealing in government securities. Recently, the CBDC segment saw 28 trades for Rs 295 crore in just one day!
While CBDC or Digital Rupee will be available by invitation to citizens from Mumbai, New Delhi, Bengaluru and Bhubaneswar in the first phase, more cities will hope to get in on this new wave of change soon.
Perhaps the question that remains is, how do you see this development playing out? Do you want to wait and see how it plays out, or dive right into the game and enjoy the glory days?
Let's wait and see!
