The Emergence of Central Bank Digital Currencies.
While the popularity of cryptocurrency is on the rise as a medium of exchange and investment, there are worries about the volatility of private digital currencies available on the internet and how they might affect the currencies of countries in the long run. As a result, the concept of central bank digital currency (CBDC) is garnering interest among institutions and governments alike. Several initiatives are being undertaken in countries such as the US (Digital Dollar), China (Digital Yuan), Sweden, New Zealand, etc. With the RBI also set towards launching a CBDC, let us take a look at what a CBDC is and what its implications will be in the economy. What are CBDCs? Also known as digital base money or digital fiat currency, a central bank digital currency (CBDC) is the digital form of legal tender issued by the central bank of a country. It is similar to a fiat currency and is exchangeable one-to-one with the fiat currency. Only its form is different. It is backed by the credit of issu
