Proposed digital currency by RBI to reduce the cost of cash
The proposed Central Bank Digital Currency (CBDC) to be issued by the Reserve Bank will play a critical role in improving the speed of transactions and reducing the cost of cash, a Deloitte report said.
The Reserve Bank of India is planning to come out with a central bank-backed digital currency, using blockchain technology in 2022-23.
As a financial services innovation, CBDCs are likely to play a pivotal role in shaping the ‘future of value transfer’, the report said, adding that most central banks worldwide are now in various stages of their evaluation of launching their national digital currencies.
“CBDCs due to its inherent potential of changing the way value transfer happens, provide a more resilient, innovative, and competitive payment system for households, businesses and economies,” said Monish Shah, partner, Deloitte India.
Currently, most security clearing and settlement processes have a multi-day lag, he said, adding “with the introduction of Digital Rupee there would be a significant increase in efficiencies and reduction in associated reconciliation costs”.
The report said CBDCs are likely to drive efficiencies and effectiveness of a jurisdiction’s payments system by ensuring that its users access safe digital money. CBDCs will provide users with a sovereign option as compared to other less safe digital instruments, which may lead to less reliable payments, relatively volatile store of value and potentially erode monetary and financial stability.
