In a concept note on CBDC, the RBI stated that its goal is not to replace existing payment systems, but to enhance payment options. It will be supported by the country’s state-of-the-art payment systems. These systems are affordable, efficient and safe. The digital economy of the country will get a boost from the digital rupee system. It will also contribute to financial inclusion. CBDC is issued by the Central Bank of the country and is a digital model of currency. Central banks in many countries are exploring the possibility of issuing CBDCs.
In this year’s budget, the central government had announced the launch of CBDC from the financial year 2022-23. RBI said, “Trial will be started soon for special use cases of e-Rupee. As the scope of this trial increases, the special features and benefits of e-Rupee will be informed.” CBDCs can be placed into two categories – general purpose or retail (CBDC-R) and wholesale (CBDC-W). The retail CBDC will be made available to all, while the wholesale CBDC will be accessible to select financial institutions. CBDC is a blockchain-based payment solution, which is controlled by the Central Bank. It works like cryptocurrencies but unlike cryptocurrencies, CBDCs do not have the volatility and other risks.
Finance Minister Nirmala Sitharaman had said that CBDC will increase payment options for the people of the country. The central government hopes that this will also help in meeting its goal of increasing financial inclusion. The development of CBDC is not being interfered with by the government and full responsibility has been given to RBI. Some countries have started work on plans to launch CBDCs. The Federal Reserve in the US is considering launching a CBDC. Russia has started testing its CBDC called the Digital Ruble.
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