Arjuna (Fictional Character): Krishna, whythere is a lot of discussion going around about Digital Rupee?
Krishna (Fictional Character): Arjuna, RBI launched Digital rupee and it is considered as a mean to implement monetary policies to provide stability, control growth, and influence inflation.
Arjuna (Fictional Character): Krishna, what is Digital Rupee?
Krishna (Fictional Character): Arjuna,the Digital Rupee is a Centrally Backed Digital Currency (CBDC) which is like regular currency notes issued by RBI but in electronic form. It is backed by most secured technology of Block Chain and the faith and credit of RBI. Digital Rupee aims at replacing traditional currency notes and can be used for making and receiving payments via QR codes or through Digital Rupee wallets. Currently it is launched in wholesale format between Banks, later it will be available in retail format with all account holders across banks.
Arjuna (Fictional Character): Krishna, what are the special features of Digital Rupee?
Krishna (Fictional Character): Arjuna, the features of Digital Rupee are as follows:
1. No bank Account is required to transact Digital Currency.
2. Only one Digital Rupee wallet can be linked to a Mobile Number.
3. The Digital Rupee can be transacted without the use of Internet.
4. Digital Currency is just like normal currency and no interest will
be paid for keeping Digital Currency in the e-wallet.
5. Digital currency is not like cryptocurrency the value of Digital Currency does not fluctuate it remains constant over the period of time.
Arjuna (Fictional Character): Krishna,how is Digital Rupee different from Cryptocurrency?
Krishna (Fictional Character): Arjuna, For Eg. If you want to buy any vegetable or fruits from the market then you can make the payment through Digital Rupee as a medium of exchange but we cannot use Cryptocurrencies to make the payment of the same. Cryptocurrencies are based on blockchain technology where each transaction is publicly recorded for anyone to see, whereas digital rupee is also based on Blockchain technology, but transactions will not be publicly available, but RBI will be able to track to the transactions which are taking place through Digital Currency.
Arjuna (Fictional Character): Krishna, what will be impact of Digital Rupee on the economy in the future?
Krishna (Fictional Character): Arjuna, in future the government may try to regulate several sectors by making Digital rupee as an only medium of exchange in the specific sector. For Eg. Government may ask the citizens to transact with government for making payment of Taxes, Electricity bills , water bills with the help of digital rupee. With the introduction of Digital Rupee ATM may also become redundant.
Arjuna (Fictional Character): Krishna, what is the impact of digital currency on accounting and taxation?
Krishna (Fictional Character): Arjuna, Digital Rupee will bring transparency in the economy which in turn will help in increasing the tax collection to the Government. Also with new currency being introduced accountants and CA’s have to perform extra steps and measures to record transactions taking place through Digital Rupee.
Arjuna (Fictional Character): Krishna, what is the motive of Government behind Digital Rupee?
Krishna (Fictional Character): Arjuna, the motive of government is as follows:
1. Digital Rupee is more secured than carrying physical cash.
2. It is easy to keep track of receipts and payments.
3. Smooth and Hassle free transactions could take place at no charges.
Arjuna (Fictional Character): Krishna, what should one learn from this?
Krishna (Fictional Character): Arjuna,by bringing Digital Rupee the government is trying to move towards digitalization and trying to minimize the cash transactions.Digital Rupee will help government monitor the high valued transactions and bring transparency in the money market. There are some threats such as centralised data maybe used by someone for other motives and there is lack connectivity in rural areas which may require some time to be developed. Lets see what’s there in upcoming Union Budget 2023 on Digital Currency usage.
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