Central Bank Digital Currency

 Central Bank  digital currency

“CBDC  is a remarkable cryptographic achievement, and ability to create something that is not duplicate in digital world has enormous value.” Central banks are rolling up their sleeves and familiarizing themselves with the bits and bytes of digital money.

What is central bank digital currency?

Dear readers If you don’t know you should definitely know because you’ll surely be using it in the near future. Central bank digital currency is digital currency similar to cryptocurrency issued by a country’s monetary authority or central bank with it’s value pegged to it’s home country’s currency.

The objective of CBDC’s are to provide businesses and consumers with financial privacy transferability convenience security accessibility and lower cost of money transfer unlike cryptocurrency CBDC likely not anonymous.

How it functions?

e₹ will be transacted and store using a digital wallet on smartphones. Every transaction will be recorded in real time to common ledger. The CBDC is real time as it is based on blockchain/common ledger which is updated on both ends immediately with execution of transfer.

Reasons behind its implementation -

• e₹ provide a more efficient and cheaper currency management system.

• Lower cost of issuance, storage, transportation and settlement unlike notes which incurred approximately 5k crore for just printing money.

• No risk of stolen or torn making it a perfect substitute for cash.

• Security of e₹ while bank balances are insured up to Rs. 5 lakh.

Why CBDC?

As you guys have read the above points of CBCD probably you think why we use CBCD as it’s similar to other transaction like UPI and cryptocurrency but here you wrong because the main feature that CBCD provide “UPI and other payments are made in real time are settled later between bank which work as intermediary. The process of final settlement among banks take from 1 day to a week ,However in case of CBDC every penny transferred between two individual will be settled immediately.”

Online Fraud: The trail money can be tracked. This reduces these fraud and investigation easier.

Govt subsidy:  Govt can trace subsidy transfer and siphoned off money can be investigated reducing such fraud to zero. Currently 5-10% of transacted amounts taken by brokers and bank for cross border transaction, also taking many days to settle the transaction.

International monetary system: Currently all transactions are carried out using SWIFT system which makes such transaction firmly in control of west and US dollar.

These are the my thoughts to take CBDC and you can dropdown the comment of your thoughts

I want to thank everyone who taken the time to read my blog and comment on my post.

Happy Reading!!

~By Priya Pandey