4 min read.Updated: 08 Feb 2022, 10:18 PM ISTAndy Mukherjee, Bloomberg
It could take time to weigh the benefits of its promise against risks
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India has surprised the payments world by announcing that its central bank will issue a digital currency as early as 2022-23, a crucial decision that most major economies are refusing to make in a hurry. According to finance minister Nirmala Sitharaman, an electronic representation of India’s legal tender will boost its digital economy. How valid is that claim, and how risky is a hasty transition to a central bank digital currency? A digital rupee will be like banknotes, minus ATMs. Users will be able to transfer purchasing power from deposit accounts into smartphone wallets in the form of online tokens, which like cash will be a liability of the Reserve Bank of India.