Abstract
This paper attempts to introduce Central Bank Digital Currency (CBDC) , analyze its types, main objectives, significance, limitations and give a detailed account of the same. With the developments in the economy and the evolution of the payments system, the form and functions of money has changed over time, and it will continue to influence the future course of currency. The concept of money has experienced evolution from Commodity to Metallic Currency to Paper Currency to Digital Currency. Furthermore, with the arrival of cutting edge technologies, the next milestone in monetary history is the digitization of money. CBDC’s are digital currencies issued by the central bank of a country. CBDC’s a re currently in use in different currencies and it is important to understand its roles and the impact it has on society. CBDC is a digital equivalent to fiat money. It is based on ledger technology. The main goal of CBDC is to provide privacy and security of transactions and convenience. CBDC’s are likely to play a key role in the economy in the future. CBDC is a digital form of the national currency, as opposed to Bitcoin, which is not backed by the full confidence and credit of the issuing government. Recent advancements in technology based payment systems have prompted central banks throughout the world to investigate the potential benefits and hazards of issuing a CBDC in order to keep up with the current trend in innovation. CBDC is a topic of current research among central banks globally. Many central banks began their CBDC efforts by developing DLT proofs of concept (Pocs) to replicate and expand wholesale payment systems. The fundamental principles emphasize that authorities must first be sure that issuance would not jeopardize monetary or financial estability and that a CBDC may survive with and complement existing forms of money, hence boosting innovation and efficiency.
Keywords:CBDC, Digital currency, Financial inclusion, Blockchain, Digitisation
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