Will FM provide further clarity, direction on plans for digital rupee?
Representational image. Moneycontrol.
With Union Budget approaching, the talk of securing and ensuring ease of transaction in Central Bank Digital Currencies (CBDCs) is further gaining ground.
Central Bank Digital Currencies (CBDCs) are the talk of the town and would soon see the light of day. With pilots in the Digital Rupee already running in the wholesale (e₹-W) as well as the retail digital Rupee (e₹-R), there is a growing expectation that the upcoming Union Budget will provide further clarity and direction on the government’s plans for the digital rupee.
Digital currency could be a gamechanger for financial system
The increased interest in CBDCs is also a result of the shift in global budget focus towards digitalization and technology in order to be more efficient and cost-effective. The advent of a digital currency (DC) would signify a transformative shift towards a cashless economy in India, and could potentially revolutionize the country’s financial infrastructure and could be a potential game changer for the Indian financial system.
The ongoing economic uncertainty and the potential for monetary policy challenges in the wake of the COVID-19 pandemic have led many governments and central banks to explore the possibility of issuing CBDCs as a means of ensuring financial stability and promoting economic growth.
The potential benefits of a CBDC, underpinned by blockchain technology and backed by the government’s full faith and credit, cannot be ignored. It could provide individuals with a secure and convenient mode of digital transactions, and be a more stable and reliable form of currency.
One of the most significant advantages of CBDCs is their potential to enhance efficiency. By reducing transaction costs and making it easier for individuals, particularly those in underserved areas or without access to traditional banking services, to access financial services, CBDCs have the potential to increase financial inclusion. Additionally, CBDCs could also augment the stability of the financial system by providing a…
