Central Bank Digital Currency
Part of: Prelims and GS-III Economy
Context: The Minister of State for Finance has informed Rajya Sabha that Reserve Bank of India is currently working towards a phased implementation strategy for introduction of Central Bank Digital Currency (CBDC).
What is Digital Currency?
- It is a payment method which exists only in electronic form and is not tangible.
- It can be transferred between entities or users with the help of technology like computers, smartphones and the internet.
- Although it is similar to physical currencies, digital money allows borderless transfer of ownership as well as instantaneous transactions.
- Digital currency is also known as digital money and cybercash.
- CBDC is a digital form of Fiat Currency which can be transacted using wallets backed by blockchain and is regulated by the central bank.
- Fiat money is a government-issued currency that is not backed by a commodity such as gold.
- Fiat money gives central banks greater control over the economy because they can control how much money is printed.
- It is a legal tender issued by a central bank in a digital form.
News Source: Newsonair