The Bahamas.
A country in the Caribbean region, more familiar for its pristine beaches, long holidays of the rich and famous, and lavish parties, in October 2020, did something that raised eyebrows across the financial world.
It beat China by six months to launch its own Central Bank Digital Currency or CBDC.
Nigeria was quick to follow The Bahamas with its eNaira, another CBDC in October 2021 itself. As of now, as many as 80 countries, presiding over 90% of the world’s GDP, are exploring launching their own CBDCs, including India. This says a lot about their significance. Seamless digital payments in recent years have made life a breeze. Learning from cryptocurrencies, the mainstream financial world is perhaps learning from them. But is there some other motive?
From gold coins in olden days to the barter system for transactions, the presence of currency in some form has been quintessential to economic activity. From this historical perspective, introduction of a digital rupee or a CBDC would be a quantum jump, though not without challenges.
What’s a CBDC and what does it mean to have one?
A CBDC is virtual or digital money issued and backed by the central bank. Unlike a private cryptocurrency created with decentralisation at its core, a CBDC would be government-controlled like any other legal tender.
India’s digital rupee will be 100% backed by the Reserve Bank of India (RBI). It will be a liability of the RBI like other currencies. The digital rupee will be fully controlled by the government and the central bank.
On the contrary, a private cryptocurrency is not controlled by any one organisation, individual, or government. There’s a lot of flak that private cryptocurrencies have gotten about this very fact.
And CBDCs, like the yet-to-be-launched digital rupee, haven’t been spared.
Read More at https://economictimes.indiatimes.com/prime/fintech-and-bfsi/the-abc-of-indias-and-other-countries-cbdcs-and-how-close-we-are-to-the-digital-rupee-/primearticleshow/90786308.cms
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