As mentioned by the deputy governor of the Reserve Bank of India, the RBI is working on CBDC. The Central Bank Digital Currency will be the official digital currency of the RBI.
Just like the other world superpowers the US, the UK, China, and India are working on developing their digital currency. Hence, the CBDC is just the digital version of our currency, that is the rupee.
Cryptocurrencies had gained popularity over the recent years after their launch. This was primarily due to the many advantages they had over physical currencies. However, they had several loopholes and were unregulated. Hence to reap the advantages of the blockchain technology behind cryptocurrencies, India is working on its very own digital currency.
The advantages of CBDC
Digital currency holds the capability to store data and can act as a digital ledger for each digital coin. Hence it ensures transparency. The government can easily track illegal money transactions, black money and money laundering. Hence it will help in deterring financial crimes to a huge extent.
Also, this will increase the transaction speed just like any other digital currency. Moreover, this speed will remain the same even on bank holidays. Furthermore, international transactions will be made easier by CBDC.
Also, the transaction fee is a lot less for digital currencies. Moreover, since it will use blockchain technology, user data cannot be tampered with. Hence, CBDC will be more secure and gain people’s trust. Additionally, the RBI mentioned that the CBDC will be framed in a way making it less volatile. This will make it a highly reliable currency.
The Cons of CBDC
With the rise of cashless and digital currency, cyber crimes are increasing rapidly. Hence if CBDC is launched before strengthening the cybersecurity measures, it might invite more trouble.
Also, cyber crimes increase every day. There’s no certainty that digital ledgers for each coin can stop money laundering and corruption. Digital currencies can still be used for illegal activities. Moreover, since this transaction data can be accessed by the government, people will face privacy issues. People might stop themselves from using digital currency in the first place given the digital surveillance by the government.
