- The Reserve Bank of India launched the pilot of its central bank digital currency (CBDC), which is the one that is categorized as a legal tender in digital form.
- It is popularly known as digital rupee and it can be exchanged at par with existing currencies.
So, people need to make sure that India’s first Digital Rupee pilot projects start in the month of November 2022. The RBI is also the one that declared the first pilot in the Digital Rupee, which is the Retail segment which is planned for launch within a month in some chosen locations in the closed user groups comprising customers and different merchants.
What Does Digital Money Mean?
Here, people should know that Nirmala Sitharaman, the Finance Minister of India, presented the Union Budget 2022 and declared that the Reserve Bank of India would be very well rolling out its entire digital currency soon.
On the other hand, digital currency is exclusively exchanged through virtual means and does not leave the computer network. There are three different types of digital currencies and they are cryptocurrency, stablecoins, and central bank digital currencies (CBDCs).
Moreover, the entire foundation of the cryptocurrency is provided by blockchain technology, which is also considered the most usual form of distributed ledger used by digital currencies.
Pros and Cons Of Digital Money
It is important to note that digital currency is the one that makes payments much faster than currency-automated clearing houses or wire transfers, which always take days for financial institutions to confirm a transaction.
There are times when global transactions can get very expensive and individuals are always charged high fees to move funds from one nation to another, especially when currency conversions are included.
On the other side, crypto popularity is a downside and as per the head of Sidley’s FinTech and Blockchain group, Lilya Tesler, there are different digital currencies that are created with their own limitations across different blockchains.
It is also known by all that crypto is the one that uses blockchain technology, where all the computers must resolve complex equations to validate and then record transactions. Later, a significant amount of electricity is taken, as people need to know that the more transactions, the higher the expense.
There is also a digital currency that has made people continuously worry about cybersecurity and face many threats due to less secure methods of storing money. Different cyberattacks are the ones that are probably increasing and they can also threaten digital currency users with some virtual theft.
Conclusion
So, lastly, just by introducing the digital rupee, the RBI expects to address issues that are associated with the existing physical currencies and cross-border transactions. People need to make sure that in India, there is a cash placement, and tracking the same is considered a challenge.
Also, cross-border money transfers and converting money into foreign currency are some of the most tedious and expensive tasks. Later, with the launch of the digital rupee, the instant across-border money transfer is set to make bank cash management and operations more seamless.
