The Future of Digital Currency in India

Indian R.B.I Deputy Governor T. Rabi Shankar has recently said that the RBI may introduce the model for the operation of systematic digital currency in the country by the end of this year.

The Future of Digital Currency in India

The issue of digital currency has been in trend for the last several months and after this latest statement by Rabi Shankar, it has gone a step further. Earlier, he had said that various aspects related to digital currency are being studied seriously. In the year 2019 itself, the Inter-Cabinet Committee, formed to study various issues related to crypto/private virtual currency, recommended the Central Bank Digital Currency (CBDC).

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RBI may soon issue digital currency in the country. Its preparations have also started. How will this digital currency be and what will it change, I am writing this article for you people after my research today. You all can tell your opinion by commenting.

Is there a future for Cryptocurrency in India answer is yes, so please continue reading this article.

Many questions arise in our minds like:

What is the future of cryptocurrency?
Cryptocurrency ban in India latest news 2021?
Cryptocurrency news today in India?
Is cryptocurrency legal in India in 2021?
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Future of crypto in the next 5 years?

History of Currency:


exchange of goods for goods. This system was implemented with the existence of man, it continued till the 18th century.

Gold coin

The first gold coin was minted in Libya before 550 AD. Later gold and silver coins remained in circulation in many places till the 19th century.

Paper money

The first began in China around 630 AD during the Tang dynasty. It became popular in Europe in the 17th century.

Plastic money

The first credit card was introduced in 1958 by American Express Bank. The first ATM was installed in London in June 1967.


PayPal started e-Wallet in 1998. Mobile payments became easier with the launch of Google Wallet in 2011.

Digital currency

The first cryptocurrency was in 2009 in the form of bitcoin, the first central bank digital currency in the Bahamas on October 20.

What is Digital Currency?

It is a digital version of the country's fiat currency (such as the rupee, dollar, or euro). It is issued by the central bank. Also, it gives a guarantee. It is one-to-one exchangeable with fiat currency as well. However, this will be different from existing forms of private money such as e-money (money stored in prepaid wallets) or bank deposits that can be transferred electronically using cards or mobile payment systems.

Somewhere digital currency is also a part of digital marketing and both are related to each other.

Will it be a form of cryptocurrency?


Not completely. No one is accountable to cryptocurrencies, whereas digital currency, on the contrary, will be liable to the central bank. The price of cryptocurrencies fluctuates a lot. Bitcoin is an example of this. Its price has fallen to less than half in the last three months. Cryptocurrencies are mined. Blockchain technology is used for this. It is not issued by any government or any regulatory authority. In contrast, digital currency is issued by the central bank. However, very few countries have come forward to issue such currencies so far.

How will digital currency work and how can digital currency be?

Let us know on the basis of various studies what are the different forms of CBDCs:

Retail C.B.D.C or Wholesale C.B.D.C:

The retail CBDC(Central Bank Digital Currency) will be primarily aimed at the general public and businesses (households and businesses) and will be made widely available. Whereas wholesale CBDC will be used only for inter-bank payments, security settlement, or other wholesale transactions.

Account-based or token-based:

Token-based CBDCs can also be of two types, either retail or wholesale. Whereas account-based CBDC can be for general use.

How can this bring about a historical change?

There can be two models of CBDC based on public and private partnerships. Let us see how these models will work:


Under this, the central bank issuance of CBDC to ensure its accessibility to the end-users. Will be responsible for all aspects related to


In this, the central bank will develop a core system and the private players will be responsible for ensuring the accessibility of the CBDC system to the users.

There is a possibility that the RBI in the country is for the general public. Retail may introduce digital currency. This will mark the beginning of a historic change in RBI's existing operational system, as in the current system, RBI has no direct relationship with the end-users. In the case of a direct or direct model, RBI will be responsible for all the new activities which will require new competencies within the bank. Surely the whole system will improve.

What will be the 6 big benefits of C.B.D.C?

CBDC is not issued yet. Therefore, on the basis of the assessment of various bankers and technologists, these advantages can be counted:

1. Decreasing Dependence on Cash:

Dependence on cash will be reduced and the cost of printing currency will also be curbed. Unlike countries like UK and Sweden, cash flow is still high in India. The cash in circulation to GDP ratio is 2.3 in Sweden and UK compared to 12% in India percent and only 3.4 percent.

2. Will Promote Financial Inclusion:

Due to the huge population, there are still 19 crore people in India who do not have bank accounts. This figure is as of 2017. To an extent, CBDC can be a good option to promote financial inclusion.

3. Digitalization will boost:

Several steps have been taken to promote digital payments in India in the last few years. The introduction of digital currency will improve the efficiency of the payment system as well as encourage competition and innovation in the sector. 

4. On Private Digital Currency

Rein: If more people switch to private digital currency (like bitcoin) then the ability of the central bank could be affected which would ultimately be dangerous for the country's economy. The central bank believes that CBDC is on the private digital currency may be helpful in reining in.

5. Financial crime can be prevented:

This could improve the country's ability to deal with financial crimes such as money laundering and tax evasion, as the CBDC system will make it much easier to track and identify transactions.

6. Improvement in the Cross-Border Payment System:

CBDC can play a big role in this too. In the case of foreign exchange transactions in this system, there will be no delay in settlement irrespective of the time zone. This will ultimately be beneficial for the economy of the country.

Thank You for reading: The Future of Digital Currency in India written by the Educarehub Channel team.


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