The Central Bank Digital Currency (CBDC) will boost the financial services sector, enable financial inclusion, reduce costs of managing cash and boost innovation in the cross-border payments space, the Economic Survey 2023 has said.
The endorsement comes three weeks after the Reserve Bank of India (RBI) Governor Shaktikanta Das said that the cross-border trade settlement in rupee and CBDC has a huge potential.
According to the survey, as of July 2022, 105 countries were in the process of exploring CBDC. These countries account for 95 percent of the global GDP. Most of these countries have either launched or piloted CBDC.
India piloted its Digital Rupee in the wholesale segment on November 1, followed by the pilot in the retail segment on December 1. The wholesale segment pilot was launched with the use limited to the settlement of secondary market transactions in government securities, while the retail segment testing is being done with a closed user group of customers and merchants.
The Economic Survey said that the CBDC will offer several benefits and use cases and also lead to a “reduction in operational costs involved in physical cash management, fostering financial inclusion, bringing resilience, efficiency, and innovation in the payments system, boosting innovation in cross-border payments space, and providing public with uses that any private virtual currencies can provide, without the associated risks.”
The RBI is gradually expanding the pilots to include more banks, users, and locations based on feedback. Earlier this month, Das also pointed out the possible risks of the CBDC or the digital rupee such as cloning.
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