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Digital currency & their economic value
February 07, 2022
Digital currency issued by the national bank is legal tender in digital form.
It is likewise often called Central Bank Digital Currency (CBDC).
A digital currency is equivalent to a fiat currency and is exchangeable one to one with the fiat currency, only its form is different.
It appears as a liability or currency in circulation on a Central bank’s balance sheet. Presently, with the rise of digital modes of payment, digital currency is expected to provide a convenient alternative to physical cash.
Finance Minister Nirmala Sitharaman has in the Union Budget proposed to introduce a Digital Rupee, using blockchain and other technologies, which would be issued by the RBI.
The Finance Bill has proposed to alter Sections 2 and 22 of the RBI Act, 1934, to give clearness that CBDC would likewise be regarded as banknotes.
According to the Atlantic Council, at least nine nations have launched their own CBDC with Nigeria launching the e-Naira. China also has launched its digital yuan.
The US Fed and the European Central Bank are also researching and working on their own CBDCs.
Important Links:
- PG Diploma in Banking, Financial & Insurance (BFSI): https://tscfm.org/courses/pg-diploma-in-banking-financial-insurance-bfsi/
- 4-IN-1 Professional Diploma in Banking, Financial Services & Insurance (PDBFSI): https://tscfm.org/courses/4-in-1-professional-diploma-in-banking-financial-services-insurance-pdbfsi/