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India Should Adopt Basic Model for Central Bank Digital Currency: RBI


India Should Adopt Basic Model for Central Bank Digital Currency: RBI

RBI has said that a basic model for central bank digital currencies should be adopted initially

Mumbai:

The Reserve Bank of India (RBI) has said that the country needs to initially adopt the basic model of a central bank digital currency (CBDC) and use the payment system architecture as the backbone. live to create a modern system.

In its basic form, CBDCs provide a secure, powerful, and convenient alternative to physical cash. Depending on different design choices, it can also take the complex form of a financial instrument.

Given its dynamic impact on macroeconomic policymaking, it is necessary to initially apply basic models and comprehensively test them so that they have minimal impact on monetary policy and the financial system. India’s progress in the payments system will provide a useful backbone to create a modern CBDC-state for its people and financial institutions,” the RBI said in the report. Report on ‘Banking Trends and Progress in India 2020-21’.

Compared to existing forms of money, CBDC can benefit users in terms of liquidity, scalability, acceptance, ease of anonymous transactions and faster payments, and adds additional Central banks around the globe are pondering how to implement CBDCs. .

The RBI examined the use cases and outlined a phased implementation strategy to roll out CBDCs with little or no disruption.

Central banks around the globe are pondering how to implement CBDCs, moving forward from their early exploratory steps.

Earlier this month, the RBI Central Board of Directors discussed various aspects related to CBDCs and private cryptocurrencies.

Parliament was recently informed that the government received a proposal from the RBI in October 2021 to amend the Reserve Bank of India Act 1934 to enhance the scope of the definition of ‘banknotes. banking’ to include currency in digital form.

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