DAILY NEWS ANALYSIS

GS-III : Economic Issues Digital currency

02 November, 2022
6 Min Read

Digital Rupee

The first pilot in the Digital Rupee, Wholesale segment according to the Reserve Bank of India (RBI), will start on November 1st, 2022.
The first trial in the Digital Rupee - Retail category will debut in a month in a few key areas with closed user groups made up of consumers and retailers.

Describe Digital Rupee.

A digital version of currency notes produced by a central bank is known as a Central Bank Digital Currency (CBDC) or Digital Rupee.
It is a digital method of payment that supports contactless exchanges.
It is characterized as the Reserve Bank of India's legal tender.
Background: Finance Minister Nirmala Sitharaman stated that the Reserve Bank of India (RBI) would shortly launch its digital currency when presenting the Union Budget 2022.

Forms:

There are two different types of CBDC.

Retail (CBDC-R): Retail CBDC might be accessible to everyone.
Wholesale (CBDC-W) is intended for specialised financial institutions with limited access.
Benefits include "supporting India's digital economy, enhancing financial inclusion, and improving the efficiency of the monetary and payment systems."
A digitised currency will lower transaction costs and make it simpler for governments to access all transactions taking place inside authorised networks.
In contrast to actual notes, a digital currency will have an infinite lifecycle. According to the CBDC, "CBDC is intended to supplement, rather than replace, present forms of money and is envisaged to provide an extra payment pathway to users, not to replace the existing payment systems."

Adoption of digital currency has risks

cyberthreats and hacks
invasion of privacy

Bitcoin versus digital currency: differences

A decentralized digital asset and medium of exchange based on blockchain technology is known as a cryptocurrency. It has, however, mostly generated controversy because of its decentralised character, which refers to its operation without the use of any middlemen like banks, financial organisations, or central governments.
On the other hand, the Reserve Bank of India (RBI) will issue Central Bank Digital Currency (CBDC) that would be accepted as legal cash online.
In that it would be backed by the government, the digital rupee will vary from Bitcoin, Ethereum, and other cryptocurrencies.
Second, the digital rupee will be similar to holding a physical rupee equivalent since it has intrinsic value due to government backing.

Future Possibilities

Future pilots will concentrate on other wholesale transactions and cross-border payments as a result of the lessons learned from this trial.
In order to create a CBDC ecosystem and ensure its sustainability, it is crucial to solve the current challenges and for CBDC to operate as an inclusionary tool by resolving the concerns through innovation

Source: The Hindu

Join Our Telegram

Increasing the Biosphere's Footprint

Social Media Impact on elections

Pradhan Mantri Suryodaya Yojana

06 Feb, 24
SHARE

Recently, Prime Minister announced Pradhan Mantri Suryodaya Yojana under which 1 crore households will get rooftop solar power systems. India’s Status of Current Solar Capacity India currently stands at 4th place globally in solar power capacity. As per Ministry of New an

Foreign Contribution Regulation Act (FCRA)- NGO

06 Feb, 24
SHARE

The Foreign Contribution Regulation Act, 2010 (FCRA) registration of two prominent non-governmental organisations (NGOs) — Centre for Policy Research (CPR) and World Vision India (WVI) have been cancelled this month. What is FCRA? Key provisions of FCRA, 2010 Key aspects Description

Voice clone-AI

06 Feb, 24
SHARE

Voice clone fraud has been on the rise in India. AI voice cloning – It is the process of creating a synthetic replica of a person’s voice through machine learning and speech synthesis technology.It is called as voice deepfakesor audio deepfakes. Objective – To achieve a high level of na

Science communication- how to promote

06 Feb, 24
SHARE

Steps taken by India to promote Science Communication Publications and Information Directorate (PID) - An organisation under Council of Science and Industrial Research (CSIR) established in 1951 for publishing and disseminating scientific information in India. National science magazines- The PI

Universal Basic Income (UBI)- Analysis

05 Feb, 24
SHARE

Universal Basic Income (UBI) can strengthen welfare architecture and unlock the nation’s latent demographic potential. UBI - It is an income support mechanism typically intended to reach all or a very large portion of the population regardless of their earnings or employment status. Objective- To provide enough to co

Quick Links Testimonials FAQ

Crash Course

Regular Modules 2024

Mains

Optional

Digital Rupee

Digital Rupee

Describe Digital Rupee.

There are two different types of CBDC.

Adoption of digital currency has risks

Bitcoin versus digital currency: differences

Future Possibilities

Pradhan Mantri Suryodaya Yojana

Foreign Contribution Regulation Act (FCRA)- NGO

Voice clone-AI

Science communication- how to promote

Universal Basic Income (UBI)- Analysis

DNA

06 Feb,2024

GS-III

PT Pickups

Toppers

Search By Date

Top Editorials

UPSC Courses

Saarthi Mentorship Programme

Important Tags

Articles:Geography And Environment

Articles: History Culture Society

Articles: Governance & National Issues

Articles: IR & IO

Articles: Economic Development & Economic Issues

Articles: S&T Internal Security

Articles: Ethics & Others

Articles: Others

Newsletter Subscription

SMS Alerts

Important Links