{"id":169539,"date":"2022-03-21T15:26:06","date_gmt":"2022-03-21T09:56:06","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=169539"},"modified":"2022-03-21T15:26:06","modified_gmt":"2022-03-21T09:56:06","slug":"central-bank-digital-currency-cbdc-timeline","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/central-bank-digital-currency-cbdc-timeline\/","title":{"rendered":"Central Bank Digital Currency (CBDC) | Timeline"},"content":{"rendered":"

In the recent Union Budget speech, the Finance Minister announced that the RBI will issue India’s own digital rupee in financial year 2022-23. The budget announcement was made after consultations with the RBI, and the RBI will decide by when it is ready to launch the digital rupee.<\/span><\/span><\/p>\n

\u2013 India\u2019s rushed deadline to issue a digital currency seems to be at least partly a response to the rise in the popularity of cryptocurrencies.<\/strong><\/p>\n

\u2013 Another reason for hurry, may be a desire to compete with China\u2019s e-CNY<\/strong>, which by early November had some 140 million individuals signed up for its e-CNY. But China has no national roll-out date, and Alipay and WeChat Pay retain their stranglehold on digital payments.<\/p>\n\n\n\n
For other articles under the TIMELINE Initiative, <\/strong>click HERE<\/a><\/strong><\/span> \u2192<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

RBI Deputy Governor has said that the central bank is \u201cworking towards a <\/span>phased implementation strategy<\/span><\/b>\u201d and will examine the CBDCs in the wholesale and retail segments.<\/span>\u00a0<\/span><\/p>\n

It is worth mentioning that with the rise in popularity of Cryptocurrencies like Bitcoin, more than 50 countries are looking into the possibility of introducing their own CBDCs.<\/p>\n

Hence, the future of globalization is CBDC-based.<\/p>\n

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What is a CBDC?<\/strong><\/div>\n
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Digital Rupee: Advantages and Challenges \u2013 Explained, pointwise \u2013 3rd Feb 22<\/strong><\/span><\/p>\n

A Central Bank Digital Currency (CBDC), or national digital currency, is the digital form of a country\u2019s fiat currency. Instead of printing paper currency or minting coins, the central bank issues electronic tokens. This token value is backed by the full faith and credit of the Government.<\/strong><\/p>\n

CBDC is just a wallet or an electronic purse<\/strong>, issued by a central bank. There are many such wallets operating in the Indian financial system. The CBDC will be one of them, but with a difference that it will be issued by the nation\u2019s central bank.<\/p>\n

CBDC will be based on blockchain technology and in the Indian context, it will be regulated by the RBI<\/strong>.<\/p>\n

The digital rupee could be exchanged for cash<\/strong> and will open new opportunities in the fintech sector.<\/p>\n

Note<\/strong>: The Union Budget 2022-23 has used the term Virtual Digital Assets<\/strong>\u201d (VDAs) for all digital assets being transacted on the blockchain, such as cryptos, non-fungible tokens (NFTs), or any other virtual asset.<\/em><\/p>\n<\/div>\n

What is the global situation wrt CBDCs? – updated on 3rd Feb 22
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\u201cRBI shouldn\u2019t rush the launch of India\u2019s official digital rupee\u201d – Live mint – 9th Feb 22<\/strong><\/span><\/p>\n

USA: The US Fed is seeking the public\u2019s views on whether to provide an official tender to compete against private stablecoins.<\/p>\n

Europe: A digital euro is in a 24-month investigation. If all goes well, the European Central Bank may offer it by 2025. Japan may delay a call to 2026.<\/p>\n

Digital Rupee: Advantages and Challenges \u2013 Explained, pointwise \u2013 3rd Feb 22<\/strong><\/span><\/p>\n

1) Sweden<\/strong> is conducting real-world trials of their digital currency (Krona<\/strong>);
\n2) The Bahamas<\/strong> has already issued their digital currency \u201cSand Dollar<\/strong>\u201d to all citizens;
\n3)<\/strong> In October 2021, Nigeria<\/strong> became the latest country to introduce a digital currency, e-Naira<\/strong>.
\n4) China<\/strong> started a trial run of their digital currency e-RMB<\/strong> amid pandemic. They plan to implement pan-China in 2022. This is the first national digital currency operated by a major economy.<\/p>\n

Countries like Japan, Singapore are currently examining the various facets of such a transition. A few days ago, the US Federal Reserve also released a report outlining the costs and benefits of issuing a central bank-backed digital dollar.<\/p>\n<\/div>\n

What is the need for a CBDC in India?<\/strong><\/div>\n
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The merits of an RBI digital currency far outweigh risks – Live mint – 13th Aug 21<\/strong><\/span><\/p>\n

Helps in becoming more globalized<\/strong>: First, becoming more globalized in terms of international trade and investment are critical to India\u2019s national interests.<\/p>\n

Shifting from SWIFT<\/strong>: The current international payments system based on SWIFT is costly in terms of both time and money. So, within no time the international trade, investment and even remittances will look to shift to multi-country CBDC networks. In order to remain globally competitive under these circumstances, India will need to have a CBDC.<\/p>\n

Helps in domestic digitalization<\/strong>: An Indian CBDC can also help domestic digitalization. Current efforts at financial inclusion have seen very limited participation by private-sector banks, with the bulk of the burden being placed on public sector banks at considerable loss to them. Since the for-profit NUE (New Umbrella Entity) mechanism is also bank-account-based, it might strengthen the divide. This will make inclusive digitalization a challenging project. CBDCs may provide an alternative to the NUE (New Umbrella Entities) by working outside the banking sector, like through the postal system.<\/p>\n

Further, it will help India to slowly move towards a cashless economy<\/p>\n<\/div>\n

What are the issues & challenges in implementation of a CBDC in India? – updated on 9th Feb 22
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\u201cRBI shouldn\u2019t rush the launch of India\u2019s official digital rupee\u201d – Live mint – 9th Feb 22<\/strong><\/span>
\nTransactions conducted with CBDCs may not be visible to payment apps, and fintech firms may lose access to some data being mined for cheap loans to those who don\u2019t have collateral.<\/p>\n

Digital Rupee: Advantages and Challenges \u2013 Explained, pointwise \u2013 3rd Feb 22<\/strong><\/span><\/p>\n