There has been a growing interest in adopting a Central Bank Digital Coin (CBDC) by governments worldwide. While the answer may seem obvious, with cryptocurrencies fast emerging as an alternative mode of transaction, the need for a regulated digital coin appeared to be a logical progression for the central banks. Furthermore, the rising blockchain technology has opened up endless possibilities across varied economic sectors. Thus, it has become incumbent on the central banks to ensure the safety and stability of the global financial systems.
There is a lot of talk about CBDCs, and other distributed ledger technology (DLT) products this year. The concept of CBDC has been floated as a digital version of the fiat currency, whose records can be stored on a blockchain using DLT.
The government of India’s ‘Digital Rupee’ initiative, or CBDC, has laid the foundation for the country’s next stage of the digital payment revolution. Moreover, with the world evolving more towards digital than physical, “CBDCs can serve as digital banknotes in the digital economies of the future,” said Arun Krishnan, global head of engineering, Infosys Finacle, the fintech subsidiary of IT company Infosys (INFY).