What's New :
Join Our Open Mentorship Sessions, Register here...
UPSC Interview Guidance Program. Register here...

Central bank digital currencies: Reducing friction

  • Published
    6th Sep, 2023


RBI should carefully examine data on digital currencies to determine the way forward.

Global Trend in CBDC Development

  • International Momentum: Nineteen G20 nations are in advanced stages of developing Central Bank Digital Currencies (CBDCs), marking a global shift toward digital currency.
  • Pilot Projects and Launches: Twenty-one nations have launched CBDC pilot projects, with eleven having already introduced digital currencies, showcasing diverse modernization efforts in finance.
  • India's Progressive Steps: The RBI joined the global trend by issuing a CBDC concept note and launched wholesale and retail pilot programs, demonstrating commitment to digital currency exploration in India.

RBI's CBDC Initiatives and Their Impact

  • Pilot Expansion: RBI expands CBDC pilots to cities like Ahmedabad, Chandigarh, Guwahati, Hyderabad, Indore, and Kochi, gathering insights from diverse regions.
  • Growing Retail Adoption: RBI's retail CBDC gains a million users, 2.6 lakh merchants, aiming for 10 lakh transactions per day, indicating rising popularity.
  • Interoperability with UPI: RBI aims to enhance CBDC adoption by aligning it with the widely used Unified Payments Interface (UPI) infrastructure.

Benefits and Caution Surrounding CBDCs

  • Operational Efficiency: CBDCs promise to reduce operational costs related to physical cash management, making financial transactions more efficient and cost-effective.
  • Cross-Border Payment Improvements: CBDCs provide quick settlement, improving cross-border payments' cost-effectiveness and security, benefiting countries like India with significant remittance flows.
  • Cautious Approach Required: CBDC's far-reaching impact on financial and monetary systems requires cautious progress. Thorough data analysis and prudent decision-making are crucial for success.
You must be logged in to get greater insights.
GS Mains Classes GS Classes 2024 GS Classes 2024 GS Classes 2024 UPSC Study Material

Verifying, please be patient.

Our Centers

DELHI (Karol Bagh)

GS SCORE, 1B, Second Floor, Pusa Road, Karol Bagh, New Delhi - 110005 (Beside Karol Bagh Metro Station Gate No. 8)

Get directions on Google Maps

BHUBANESWAR (Jaydev Vihar)

GS SCORE, Plot No.2298, Jaydev Vihar Square, Near HCG Day Care, BBSR - 751013

Get directions on Google Maps

LUCKNOW (Aliganj)

GS SCORE, 2nd Floor, B-33, Sangam Chauraha, Sector H, Aliganj, Lucknow, UP - 226024

Get directions on Google Maps

Enquire Now