CENTRAL BANK DIGITAL CURRENCY
The Reserve Bank of India’s (RBI) digital currency is called the Central Bank Digital Currency (CBDC) or the Digital Rupee (e₹).
It’s a tokenized digital version of the Indian Rupee that can be exchanged one-on-one with fiat currency. The CBDC was proposed in January 2017 and launched on December 1, 2022.
ABOUT CBDC
- CBDCs are legal tender that can be used for consumer-to-consumer, consumer-to-business, and business-to-business transactions.
- They’re affordable, eliminate financial barriers, and operate on blockchain technology, which uses encryption and decentralized ledgers to protect financial transactions.
- This security can protect individuals from fraud and cyber threats.
OBJECTIVES OF CBDC
- Mitigate the risks and trim costs in handling physical currency
- Phase out soiled notes
- Reduce transportation costs
- Reduce insurance costs
- Reduce logistics costs
- Wean people away from cryptocurrencies as a means for money transfer
- The CBDC could also be used to send payments like child benefits and food stamps, and tax refunds to people instantly, rather than trying to figure out prepaid debit cards or mail them a cheque.
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