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News: The likelihood of launching a central bank digital currency (CBDC) in India is a credible possibility.
What are the challenges to introducing CDBC in India?
India has at least 500 million people with no access to a smartphone (Statistica reports the use of 845 million phones in 2021).
Large numbers have neither an Aadhaar nor PAN card, or even if they do, are not in the habit of using phones except for making calls.
Many of our senior citizens have already been robbed by online scamsters
How introducing CBDC will benefit Indian economy? Read here: Introducing National Digital Currency in India – Explained, Pointwise
Everything you want to know about CBDC
What are the areas/sectors that will be disrupted if CBDC is introduced in India?
The first is that it may lead to failure, decline, or stagnation of the entire financial system.
Payment banks will need to close down, as savers will have to maintain accounts with RBI anyway. The UPI system would be redundant. Even commercial banks will see people move money out of savings deposits and probably opt for term deposits at higher rates. ATMs will have to shut down, for sure.
The other major challenge for our central bank will be technology disruptions. Hackers would be a threat, technical failures at banks will become a routine
Source: This post is based on the article “Watch out for an official central bank digital rupee on its way in” published in Livemint on 13th Jan 2022.