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Central Bank Digital Currency

  • IASbaba
  • March 16, 2022
  • 0
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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.

About CBDC

  • 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

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