Central Bank Digital Currency (CBDC)
A Central Bank Digital Currency (CBDC) is the legal tender to be issued by Reserve Bank of India (RBI) in a digital form. It is the same as a fiat currency and is exchangeable one-to-one with the fiat currency.
Reserve Bank (RBI) is engaged in the introduction of a Central Bank Digital Currency (CBDC). RBI has been exploring the pros and cons of introduction of CBDC in India. The design of CBDC needs to be in conformity with the stated objectives of monetary policy, financial stability and efficient operations of currency and payment systems.
Implementation of CBDC
The RBI is examining the appropriate design elements of CBDCs that could be implemented with little, or no disruption. The RBI proposes to adopt a graded approach to introduction of CBDC, going step by step through stages of
1. Proof of Concept
Central Bank Digital Currency is Legal in India
The introduction of Central Bank Digital Currency (CBDC) has been announced in the Union Budget 2022-23. After that an appropriate amendment to the RBI Act, 1934 has been included in the Finance Bill, 2022. The Finance Bill, 2022 has been enacted, providing a legal framework for the launch of CBDC.
Reference : RBI Annual Report 2021 -2022 Released on 27 May 2022
Question: What is CBDC ?
Ans : Central Bank Digital Currency (CBDC) is a digital or virtual currency to be issued by RBI in India.