In news
The Minister for Finance & Corporate Affairs, Smt Nirmala Sitharamanannounced the introduction of Digital Rupee to be issued by the Reserve Bank of India starting 2022-23.
Significance
- It will give a big boost to digital economy.
- Digital currency will also lead to a more efficient and cheaper currency management system.
CBDC
- CBDC is a legal tender issued by a central bank in a digital form. It is similar to a fiat currency issued in paper and is interchangeable with any other fiat currency.
- The Reserve Bank of India will launch the CBDC from the upcoming financial year. This follows the government’s plans to launch the CBDC that will be backed by blockchain technology.
Details
- The Digital Currency will use block chain and other technologies.
- The digital rupee will be the digital version of physical cash issued by the RBI and will, therefore, be sovereign backed.
- The digital rupee will be different from Bitcoin, Ethereum and other cryptocurrencies in the sense it will be backed by the government.
- Having an intrinsic value on account of government backing, the digital rupee will be equivalent to holding a physical rupee equivalent.
- It is the same as bitcoin in terms of technology used that is Blockchain technology else it is totally different if we go as per definition of Cryptocurrency.
Source: PIB, Indian Express
