Good news! The Reserve Bank of India is set to launch its digital currency. On February 1, during the annual Budget, Finance Minister Nirmala Sitharaman proposed a plan to introduce RBI issued digital currency soon. The government intends to strengthen India’s digital economy with such an initiative.
The booming crypto market once seemed skeptical to the Indian government. They thought it would threaten financial and macroeconomic stability. On May 27, The RBI revealed they wished to proceed toward a graded approach regarding digital currency introduction.
The Central Bank is trying to design the new digital coin by perfectly aligning it with the monetary policies and payment system. With the assistance of central authorities, pilot projects of CBDC are about to begin.
Since its inception in February, the central bank has been trying to figure out this new currency’s possible advantages and disadvantages.
What will digital currency look like?
After announcing the new currency, people are too excited to know more about it. According to some government sources, the new digital currency will be similar to fiat currency. Like fiat currency, it will carry unique numbers in units. The new digital rupee at the time of circulation will include units.
People will find it more like a digital version of fiat currency; hence it will be a centralized wallet. The digital rupee will trace all kinds of transactions using blockchain to generate the currency.
Will CBDC promote financial inclusivity?
Besides strengthening India’s Digital economy, the CBDC might raise questions about being an inclusive financial option. Myriads of questions surround the kind of anonymity the new currency will offer. Amongst different risk factors, a critical issue concerns its geographic restriction as digital currencies are accepted in the country which issues them.
Furthermore, confusion intimidates the central bank on whether the currency will pose privacy threats like cryptocurrencies. We believe the government should address the issues and make the right decision.
