RBI’s digital currency: prospects, opportunities and risks in the Indian context

Abstract

According to modern monetary economists, government issued currency has the following properties, it acts as a unit of account, a store of value; and medium of exchange that facilitates financial & economic transactions. With high-speed networks and the advent of electronic devices, central banks around the world are exploring the possibility of establishing a sovereign digital currency. Digital penetration in India has scaled a new high. The time is right to leverage its applications while at the same time strengthen the digital infrastructure. The following report consists of our understanding of the “Central Bank Digital Currency”, looking at the various considerations and design features that shall be considered before a country goes into finalizing the model for their own country. We have analyzed the key features of the central bank digital currency, focusing on basic design characteristics rather than technical details. The report is qualitative in nature rather than quantitative. The scope of study involved understanding the prospects, opportunities, and risks for RBI’s Digital Currency in the Indian context, even though models of other countries were also looked upon. We referred to secondary resources and official Government data for research purposes and derived our insights .