Dear Readers,

As announced in last year, India has started the pilot testing of its Central Bank Digital Currency (CBDC) which is  also known as digital rupee or e-rupee in 4 cities in India from 1 December 2022.  The digital rupee would be equivalent to the physical currency of the rupee. 

                                                                                     ( Representational Image)

While India taxed the Digital Assets last year, it announced to introduce a CBDC equivalent to the value of the Indian Rupee.  Accordingly the CBDC was introduced early this month. 

It is to be noted that more than 90 countries are using the CBDC worldwide. Bahama was the first country that used the CBDC in October of 2020. The Central Bank of the Bahamas issued the Sand Dollar. 

Basically CBDCs differ from other forms of digital coins in that they are directly backed by central bank deposits or a government pledge. Therefore, they offer stable value and can aim to combine benefits in the areas of trust, regulatory stability and audit transparency.

The introduce of CBDC will pave a way to strengthen the efforts to digital inclusion mission of the country.

The CBDC would ensure the efficient and secure payments. This will also helpful for the Central Bank to track each and every transaction. The interference of the middle men would not be there. The social security scheme benefits may also be reached the beneficiary directly through this CBDT. The expenses for printing the physical currencies and its management would greatly come down. This allows the customers to use the Central bank directly. And there would be immense of benefits. 

But on the flip side, the Central bank would have the complete control over the CBDC. It also noted that there may be less privacy for the users. As most of the population do not use the mobile phones, to measure the reach needs, we need to wait for some time. 

India which is considered for its adaption of technology, this would boost and would help further with the electronic transformation of payments. Like the Unified Payment Interface (UPI) made a huge transformation, this too expect a great success!