Nitin Bhuta
Quick Summary
I cant predict the future as to what will unfold prospectively for all of us, as no one would know what lies ahead, but I have made this attempt to pen down my views for the benefit of the readers of this article which dwells on the topic of Central Bank Digital Currency - A Curtain Raiser, A Cataly
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FAQ :
A CBDC is the electronic form of physical currency, such as coins and paper money, issued by a country's central bank. It is considered legal tender and is expected to be exchangeable one-to-one with existing currency.
CBDCs are legal tender issued by a central bank, offering transparency and regulatory oversight. Cryptocurrencies, on the other hand, are not typically legal tender and operate in a less regulated environment, often associated with secrecy and volatility.
CBDCs are being introduced to mitigate risks in trade and commerce, reduce the costs of printing and managing physical currency, and to curb illegal activities like money laundering and tax evasion.
It is anticipated that CBDCs and physical cash will likely coexist as parallel systems within the Indian economy, offering users a choice between the two.
Challenges include privacy concerns due to the digital trail of transactions, the cost and complexity of developing and deploying new technology, potential disruptions to the banking industry, and ongoing cyber security risks.
Benefits include a more efficient payment system, increased digitization, a wider tax base, better fiscal monitoring, improved balance of payments, reduced tax evasion and money laundering, and potential for significant GDP growth.
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