How digital rupee will impact people? What experts say
1 min read . Updated: 17 Feb 2022, 11:14 AM IST
PremiumDigital rupee: The issuance of CBDCs will lead to a more efficient and economic currency management system in the country
The covid-19 pandemic has significantly accelerated digital usage in all areas.The digitisation wave is changing the way people do everything. Presenting Budget 2022, Finance Minister Nirmala Sitharaman announced the introduction of the digital rupee, also known as CBDC, backed by the Reserve Bank of India (RBI).
Explaining the need for a digital currency, Archit Gupta, Founder and CEO - Clear said that the Indian modern financial system that includes securities, transactions, communications, etc., has now been replaced into its corresponding electronic version, except for the currency notes.
“The number of cryptocurrencies and people investing in cryptocurrencies increased multifold in the recent past. The parallel economy created by crypto investors forced the government to step towards digitization and create its own 'digital currency'," said Gupta.
Benefits of digital currency
- Efficient transfers
- Low transaction costs
- No physical damage
- It will allow faster settlement of funds
- Lesser downtime
- Available 24*7 and no need for a bank account to have a digital rupee
- Swift and smooth cross-border transactions
According to Vinshu Gupta, Founder and Director, Nonceblox Blockchain Studio, “Digital money can potentially expand international commerce, support financial inclusion, and transform how we shop, save and do business in ways we probably cannot even yet fully understand. From programmable money to new forms of e-commerce."
The issuance of CBDCs will lead to a more efficient and economic currency management system in the country. CBDCs will be regulated by the Reserve Bank of India, mitigating the risk of volatility existing in other digital currencies.
“Digital currency payments will reduce the settlement risk in the financial system. Interbank settlement will not be required as the system will transact the digital currencies instead of bank balances, just like the cash is handed over. Similarly, forex transactions would happen on a real-time basis. For instance, an Indian exporter would be able to pay its American exporter on a real-time basis in digital dollars. As time zone difference would no longer matter, there would be no settlement risk,"explained Archit Gupta, Founder and CEO - Clear.
Digital currencies will promote real-time and cost-effective globalization of payment systems.
