Such unprinted currency will have the same legal status as the rupee. CBDC will be divided into two types for wholesale and retail transactions. Central banks in low-income countries are investigating digital currencies. As a result, it is also known as Central Bank Digital Currency (CBDC). According to a Bank for International Settlements (BIS) survey conducted in January 2020, 80 percent of 66 central banks were planning to launch digital currencies. Virtual currencies will soon be used to transact throughout the world.
The Reserve Bank has issued digital currency notes. As an experiment, the digital currency will be used first for large-scale transactions of government bonds. As crypto currencies such as Bitcoin began to spread around the world, the RBI assessed their potential. CBDCs, on the other hand, have nothing to do with cryptocurrencies. It’s just that instead of printing notes, it issues legitimate digital currency. this may unfamiliar with someone who does not even know about digital money.
What is digital currency?
Digital currency is a digital alternative to printed currency. That is, it can be considered an electronic form of money. Such currencies, which are issued without printing notes, will be legal tender in the same way that the rupee is. CBDC will be divided into two types for wholesale and retail transactions. Wholesale currency is used in financial transactions between institutions. Everyone can use retail digital currency. Anyone can now transact using Net banking and UPI.
Wholesale transaction
The RBI first issues currency for wholesale transactions. The primary application is in the secondary market for bonds and stocks. It will then be used for bank and other financial institution transactions. The goal is to gradually enable digital currency transactions at the international level. Within a month, retail transactions will be permitted.
Similar to cryptocurrency?
Cryptocurrency is a decentralized digital asset . it’s a medium of swap as said by block chain tech . That is,crypto is an activity exterior of centralized temperance,containing banks and financial institutions . This is why countries ‘ central banks have been cautious to accept and transactions have been controversial . as compare to,the digital currency reissued by the Reserve Bank of bharat will have similar legality as the printed rupee . A digital currency would additionally be equal to holding a government-backed, intrinsically-valued currency notice . Cryptocurrencies as an example Bitcoin are mined over mining utilizing pc networks . The digital currency will be reissued by the Reserve Bank .