Review Of Digital Currency Of India

Abstract

The burgeoning realm of financial technologies, marked by the emergence of cryptocurrencies, has captured the attention of central banks worldwide. A prominent trend is the exploration of the feasibility, advantages, and potential repercussions of introducing national digital currencies. India, with its unique juxtaposition of a rapidly expanding digital infrastructure and a significant proportion of the population remaining underbanked, presents a compelling case for such an evolution. The Reserve Bank of India's (RBI) proposition of a Central Bank Digital Currency (CBDC) is not merely a response to global digital currency trends but could be a transformative element in India's financial and economic landscape. Historically, the RBI has maintained a stance of caution towards decentralized cryptocurrencies, citing concerns over security, monetary control, and potential facilitation of illicit activities. However, the pivot towards considering a CBDC indicates a nuanced differentiation between decentralized cryptocurrencies and a potential state-backed digital currency. The introduction of an RBIbacked CBDC could democratize financial access, especially for remote and underprivileged segments, by integrating them into the formal economy, enhancing transaction transparency, and potentially offering a more efficient monetary policy tool. Yet, this venture is not without
challenges. Technological infrastructural needs, cybersecurity threats, potential effects on traditional banking systems, and broader economic implications need meticulous evaluation. This paper provides an analysis of India's unique financial challenges, recent policy evolutions, and global digital currency precedents.