A CBDC is a legal tender issued by the central bank, as the name suggests. It has the same functional capabilities as a fiat currency. (Representational Image)
CBDC is not subject to the same volatility of market fluctuations as the ‘traditional’ private digital asset such as Bitcoin or Ethereum.
The Reserve Bank of India (RBI), is moving towards bringing in Central Bank Digital Currency (CBDC). RBI plans on introducing this digital monetary asset in a phase-wise implementation strategy according to the Deputy Governor of RBI, T Rabi Sankar. The CBDC is being introduced in lieu of other private digital assets like cryptocurrency and is in fact a legal and legitimate form of virtual coin that will be on par with its real-world counterpart, according to Sankar. He went on to add that the central bank is framing considerations for the legal framework to be put into place so that the CBDC can coexist with cash and digital payment methods in India.
Having said that, it is important to note what exactly the Central Digital Bank Currency is, how it functions and what the RBI’s stance on it is.