WHAT IF THE government could transfer subsidies directly to beneficiaries, and no, we aren’t talking about direct benefit transfer (DBT). Say food subsidy was credited directly to the beneficiary’s mobile wallet and could only be used to buy pre-defined rations. This could soon be a reality with a central bank digital currency, or CBDC.
India has set a deadline of 2023 to launch its digital currency. A CBDC will be legal tender like paper currency with all the characteristics of the existing fiat currency. “Digital currency will lead to a more efficient and cheaper currency management system,” Finance Minister Nirmala Sitharaman said in her Budget speech for 2022-23.
A CBDC has other benefits. Now, account holders deposit their money in commercial banks. A customer’s deposit carries the liability of the bank to repay it on demand. The Reserve Bank of India (RBI) is under no obligation to compensate or reimburse any loss of value. But CBDC is supposed to be a central bank liability.
Why are central bankers so interested in cryptos? It’s because they sense likely collateral damage in terms of losing control over monetary policy thanks to the interest in such currencies among the young. “Cryptos are raising concerns on two fronts—monetary stability and financial stability. The RBI is more concerned about the monetary stability part,” says Subhash Chandra Garg, former finance secretary. “Cryptos might enable money laundering and getting around capital controls—essentially a digital hawala channel. During periods of financial stress, this might amplify market volatility,” says Saugata Bhattacharya, Senior VP & Chief Economist, Axis Bank.
This story is from the April 17, 2022 edition of Business Today.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the April 17, 2022 edition of Business Today.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Sign In
Look Before You Leap
In 2025, Investors Will Need To Factor In Volatility Across Asset Classes
"Focus on the challenge of each customer"
SHASHANK KUMAR MD & CO-FOUNDER I RAZORPAY Razorpay is India's first full-stack financial solutions company
PEDAL ON THE FUTURE
THE MG WINDSOR EV, WITH ITS FUTURISTIC AND MINIMALIST DESIGN, COMBINES THE BEST OF BOTH WORLDS-COMFORT AND TECHNOLOGY
BREATHE EASY
Whether you're battling allergies, looking to remove pollutants, or simply want to breathe easier, the right air purifier can make a difference
The Taste of India in a Glass
FROM ROYAL LIQUEURS TO DISTILLED MAHUA, INDIAN HERITAGE ALCOHOLIC BEVERAGES ARE HAVING THEIR DAY IN THE SUN
MISSING ADVISORS
INDIA HAS JUST ONE INVESTMENT ADVISOR FOR NEARLY EVERY 200,000 INVESTORS. AT A TIME WHEN RETAIL PARTICIPATION IN THE STOCK MARKETS IS BOOMING, THIS ASSUMES SIGNIFICANCE
TURNING A CORNER
SHARED ELECTRIC MOBILITY START-UP YULU'S SHIFT TO SERVICING THE QUICK COMMERCE SECTOR IS HELPING IT GROW FAST. IT IS NOW FOCUSSING ON IMPROVING ROAD SAFETY FEATURES AS IT TURNS EBITDA POSITIVE
REALITY CHECK
INDIAN STOCK MARKETS PLUNGED BEGINNING OCTOBER FOR A HOST OF REASONS, INCLUDING A FALL IN FII OWNERSHIP. HOW DEEP WILL THE CORRECTION BE?
TRUMP'S TRADE TANGO
The return of Donald Trump as the 47th President of the US has put the global economy on edge. India, too, is unlikely to remain unaffected. How will policymakers meet this latest challenge?
"The essence of the Trump administration will be transactional”
Global investor, analyst, and best-selling author Ruchir Sharma decodes why Donald Trump won the elections, what India should do, the risks, and more
