siliconindia | | JULY 202319and acceleration of digital infrastructure in the country. It will take another ten years for broader adoption and acceptance by businesses and retail consumers. However, the advantages that an common man can get from CBDC will play a significant role in deciding the fate of physical currency in the future. Since the retail CBDC pilot was launched in India in December 2022, there has been a modest activity with about 50,000 users, 5,000 merchants and 7,50,000 transactions according to industry reports. I feel there is still a need for the government to create strong awareness among the public. Thus, it is safe to say that digital currencies will not be replacing physical currencies at least in the near future. By establishing a digital footprint and integrating it with an eKYC platform, the prevalence of cash transactions can be significantly diminished. This, in turn, will enable the government to effectively monitor and curtail the circulation of illicit funds within the national financial system. This in turn will reduce the corruption rate and counterfeit currencies in the country. However, the government has to significantly enhance the current regulatory, consumer protection, data privacy infrastructure to establish a safe, trusted and resilient environment.What are the advantages and disadvantages of adopting CBDC? Please enlighten us on the opportunities associated with CBDC implementation?Improved financial inclusion one of the major advantages touted for adopting CBDC. According to World Bank, there are over 1.4 billion people who are still unbanked in the world. These are primarily women, poor, less educated and people living in rural areas. In India the number of unbanked has reduced considerably in the last few years but it is still a staggering 130 million people. Bringing these people into the financial eco-system itself can be a significant economic growth for individuals and local communities. The way a CBDC is being designed is that a person will be able to make transactions without network connectivity using even a feature mobile phone instead of having a smartphone. Secondly, it will be electronically done and digitally transacted, the cost of transactions and the costs associated with printing currencies will be cut-down significantly. Reserve Bank of India spent about 5,000 crore rupees in printing currencies in 2021-22. Thirdly, CBDC will offer the government and the central banks flexibility in terms of managing their monetary policies. Fourth, having a digital currency allows programmability of currency. One can specify how, when and for what the currency is to be used. This can be particularly useful in directing government social benefits to citizens and avoid misuse of the same. To summarize, implementing a CBDC will result in an improved financial infrastructure and provide impetus for economic growth.Policy makers, technology experts and business leaders are trying to address challenges relating to privacy, By establishing a digital footprint and integrating it with an eKYC platform, the prevalence of cash transactions can be significantly diminished. This, in turn, will enable the government to effectively monitor and curtail the circulation of illicit funds within the national financial system
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