More than 100 countries, representing over 95% of global GDP, are exploring CBDCs. While some have already deployed ecurrencies, others are either running pilots or developing them. Such e-currencies are a hotly debated subject of curiosity, confusion and even concern. Yet, no one wants to be left behind the curve.
CBDC - Central Bank Digital Currency:
Imagine if your country's money could also exist on your phone or computer. That's CBDC. It's like a digital version of your regular money, but it's controlled by the big bank in your country. This makes it super secure.CBDC works like a digital version of the money you have in your wallet. It's backed by the government, just like your regular cash. You can use it to pay for things and do business online. It's like carrying your country's money in your phone.
UPI - Unified Payments Interface:
Have you ever wanted to send money to a friend immediately, even if they're in a different bank? UPI makes this possible. It's like magic for your mobile, allowing you to transfer money from one bank account to another right away.UPI, on the other hand, is like a bridge between different banks. You can use it to send money directly from your bank account to your friend's account, without needing cash or waiting. It's like texting money.
After cryptos became popular, with Millennials and Gen-Z users experimenting with them in some form, central banks felt they had to step on the gas to deliver a next-generation payments vehicle that can flaunt the convenience of cash and characteristics of crypto. Most central banks have added the prefix 'e' to their respective currency names for end-user comfort and familiarity.
This story is from the May 2024 edition of BANKING FINANCE.
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This story is from the May 2024 edition of BANKING FINANCE.
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