RBI to launch Trial Project of CBDC by December

According to Reserve Bank of India (RBI) Governor Shaktikanta Das, RBI is set to launch the trial program of its digital currency by December 2021.

Highlights

• Currently, RBI is working on bringing its Central Bank Digital Currency (CBDC) in a phased manner.
• RBI is working on CBDC carefully because it is a new product for RBI as well as for the whole world.
• RBI is also studying different aspects of digital currency and investigating its security as well as its impact on the financial sector of the country.
• Its impact on monetary policy and the currency in the system is also being studied.

Banks running this pilot project

According to BIS survey of central banks, conducted in 2021, 86% of the banks are currently examining the potential of CBDC. 60% of central banks are testing the technology while 14% are running the pilot project.

Why virtual currency is trending?

Countries are bringing virtual currency because, use of paper currency is decreasing. Digital currency or currency in electronic mode is more acceptable. As per RBI, in countries like Denmark, Germany, Japan and America, cash transactions are very high for purchases and transactions. Thus, central banks there are seeks to introduce electronic currency in order to improve method of issuing legal tender currency.

What is Central Bank Digital Currency (CBDC)?

CBDC is a type of virtual currency, which is issued by the Central Bank. This currency is the digital version of paper currency note. This currency is being developed across many countries of the world and some countries are carrying trial.

Month: Current Affairs - August, 2021