CBDC - ECONOMY
News: RBI's
Shankar urges increased adoption of CBDC for efficient cross-border payment
What's in the news?
● Central
Bank Digital Currency (CBDC) platforms could bring about a substantive change
in the sphere of cross-border payments,
RBI Deputy Governor T. Rabi Shankar observed and added that coordination across
countries, and between the public and private sectors was, however, essential
for that eventuality to take shape.
Key takeaways:
● Cross-border
payments have been at the forefront of initiatives by G-20 and other organizations
for the last few year, Mr. Shankar said speaking at the fourth edition of the
G20 TechSprint.
G20 TechSprint:
● It
is a global technology competition to
promote innovative solutions aimed at improving cross-border payments.
● It
is jointly organized by the Reserve Bank
of India (RBI) and the Bank for International Settlements’ BIS Innovation Hub
(BISIH).
● Under
India’s G20 Presidency, the RBI and BIS have invited global innovators to help
develop innovative technology solutions for cross-border payments.
Central Bank Digital Currency (CBDC):
● It
is the legal tender issued by a
central bank in a digital form.
● It
is the same as a fiat currency and
is exchangeable one-to-one with the fiat currency. Only its form is different.
● It
will be an electronic version of cash.
● It
will be primarily meant for retail
transactions.
● It
will be potentially available for use by
all which includes the private sector, non-financial consumers and
businesses.
● It
will be able to provide access to safe money for payment and settlement.
● It
will be the direct liability of the
central bank.