UPSC Current Affairs
Central Bank Digital Currency
Central Bank Digital Currency (CBDC) or the Digital Rupee (e?). It's a tokenized digital version of the Indian Rupee that can be exchanged one-on-one with fiat currency. The CBDC was proposed in January 2017 and launched on December 1, 2022.
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Central Bank Digital Currency (CBDC) or the Digital Rupee (e?). It's a tokenized digital version of the Indian Rupee that can be exchanged one-on-one with fiat currency. The CBDC was proposed in January 2017 and launched on December 1, 2022.
Central Bank Digital Currency (CBDC) or the Digital Rupee (e?).
It's a
tokenized digital version of the Indian Rupee that can be exchanged
one-on-one with fiat currency. The CBDC was proposed in January 2017 and launched on December 1, 2022.
ABOUT CBDC
- CBDCs are legal tender that can be used for consumer-to-consumer, consumer-to-business, and business-to-business transactions.
- They're affordable, eliminate financial barriers, and operate on blockchain technology, which uses encryption and decentralized ledgers to protect financial transactions.
- This security can protect individuals from fraud and cyber threats.
OBJECTIVES OF CBDC
- Mitigate the risks and trim costs in handling physical currency
- Phase out soiled notes
- Reduce transportation costs
- Reduce insurance costs
- Reduce logistics costs
- Wean people away from cryptocurrencies as a means for money transfer
- The CBDC could also be used to send payments like child benefits and food stamps, and tax refunds to people instantly, rather than trying to figure out prepaid debit cards or mail them a cheque.
- Prelims: Key facts, institutions, locations and terminology in the article.
- Mains: Connect the topic with Economy, Polity & Governance, Science & Technology.
- Revision: Use the article headings to prepare concise notes and answer-writing points.
Test your understanding
Questions from this article
Prelims practiceWith reference to Central Bank Digital Currency, consider the following statements:
- CBDCs are legal tender that can be used for consumer-to-consumer, consumer-to-business, and business-to-business transactions.
- They're affordable, eliminate financial barriers, and operate on blockchain technology, which uses encryption and decentralized ledgers to protect financial transactions.
- This security can protect individuals from fraud and cyber threats.
Which of the statements given above are correct?
- 1 and 2 only
- 2 and 3 only
- 1 and 3 only
- 1, 2 and 3
View answer
Answer: (d) 1, 2 and 3. All three statements are drawn from the article.
Mains practiceDiscuss the background, key issues and significance of Central Bank Digital Currency for India.
Answer in 250 words.
View answer approach
- ABOUT CBDC
- OBJECTIVES OF CBDC
- Background and context
- Key facts and institutional framework
- Significance and way forward
Frequently asked questionsFrequently asked questions
Why is Central Bank Digital Currency in the news?
Central Bank Digital Currency (CBDC) or the Digital Rupee (e?). It's a tokenized digital version of the Indian Rupee that can be exchanged one-on-one with fiat currency.
What are the key facts about Central Bank Digital Currency?
The CBDC was proposed in January 2017 and launched on December 1, 2022. ABOUT CBDC CBDCs are legal tender that can be used for consumer-to-consumer, consumer-to-business, and business-to-business transactions. They're affordable, eliminate financial barriers, and operate on blockchain technology, which uses encryption and decentralized ledgers to protect financial transactions.
Why is Central Bank Digital Currency important for UPSC preparation?
The topic connects current developments with Economy, Polity & Governance, Science & Technology and is relevant for both objective revision and analytical answer writing.