Business Matters | Is there a case for digital currency when we have UPI?
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- Опубліковано 19 чер 2024
- Last week, Reserve Bank Deputy Governor T. Rabi Sankar in a speech touched upon the international context of the CBDC, like he did in July 2021 too.
The CBDC, the Indian government has said, would be introduced this year. The Central Bank Digital Currency (CBDC) is currency in digital form. It has sovereign approval and hence is called fiat currency, just like currency notes that come with the RBI Governor’s certificate of authenticity.
CBDCs have some clear advantages over digital systems - payments using CBDCs are final and thus reduce settlement risk in the financial system. If you buy fruits from a roadside vendor and pay using an app such as BHIM or Google Pay or PhonePe that use the government-enabled Unified Payment Interface (UPI) system, you send money from your bank account to the fruit vendor’s account. So intermediaries, in the form of banks, are required.
But what if, like you used to earlier, you withdraw cash from your account and use it to pay the vendor? CBDC transactions will be similar to physical cash transactions.
Given the success of the UPI, is there a case for CBDC in India? How can CBDCs help with international transactions?
Script and presentation: K. Bharat Kumar
Production: Shibu Narayan
Videography: Johan Sathyadas J
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Informative video. However, what we need now is this - RBI should start e-Rupee wallet totally free of cost (otherwise similar to ay Paytm etc.). This will complement the UPI system of payment. And RBI should cancel currency notes of Rs. 500 and Rs.2000. (i.e. all currency notes above Rs.100). This will make black money generation quite difficult and reduce cost of management of currency. Once E Rupee wallet stabilizes, RBI can introduce CBDC in due course. Anonymity is not and should not be the primary criteria. We need nuanced response. to this new technological phenomenon.
It's quite unclear how CBDC will deliver the greatest promise of cryptocurrency - decentralisation. For one, decentralisation necessitates gas fees (at least now with proof-of-work model), which is not feasible for CBDC, and second, decentralisation in highly redundant. At best, CBDC looks like it would be a government-run Paytm, where you can top up your wallet, and your bank is not directly involved in every transaction like UPI. That doesn't quite promise anonymity though, and I suspect people demanding anonymity don't want the government to track as well.
CBDC will be centralized; it's in its name. The thing is it's not competing with decentralized currencies, it's just more like a direct replacement for UPI, removing the frictions of different banking institutions, just like he said. Transactions will also be a lot more efficient compared to protocols using PoW, basically eliminating gas fees. Redundancy, yes it's a nice to have, but mostly irrelevant if the system is built to be operational 24/7, and I doubt such critical systems will have significant downtimes, if any.
Crypto is cryptic. Currency is all about belief and trust system. We are already up for trouble after delinking of gold with paper notes post 1971. It’s better to introduce governed CBDC rather than Crypto. The only premise on which crypto is operating is that it’s “limited” and “anonymised” . With so many crypto in market now, it’s not limited anymore. Why should a transaction be anonymised anyway?
I saw your every episode sir .very very good initiative sir
Thank you for explanation about CBDC in a simple and understandable manner
I like the way you explained. Very pinpointed and clear. Your way of articulation is simply great.
very simple and crisp explanation. Kudos!!
NO TO CBDC
privacy is gone then
Amazing explanation looking forward to see many such vedios
Please continue this series
TNice tutorials tutorial is so useful,I tried tons of other tutorials but tNice tutorials was the best one
Video is very informative but fails to explain the title- ‘is there a case for digital if we have upi’. It looked like more an explanation of CBDC than benefits over upi.
Very lucid explaination.ty sir
Quality #Journalism 💯 #TheHindu 👍
Good Playlist
Beautiful explanation!
Very informative ✌️
Good presentations.
I still can't understand the concept, if I am using it as a digital wallet and ultimately I'll have to add money from bank account, what is the need of it? Isn't it same as Paytm? Can someone explain
Thank you very much sir
Sir please explain future of banking system if digital payments are directly done by RBI. Role of bank dilutes. How bank will get amount in savings account. Future of FDs RDs saving account. Suppose I m sanctioned loan , how will payments be effected. Something is missing gap between my bank account and RBI.
2. If I have saving account in multiple banks. Generally, people use multiple accounts for purpose of sharemarket, retail expenses in cash, then UPI payment or rent, other income sources, nro or salary account
I feel soon there will be few banks remaining in India.
Earlier RBI detached all its department to autonomous banks viz industrial account, export import, agriculture etc
Again RBI is taking all these responsibility
👍👍
Nicely explained
🎉✌️
Amazing!!
Sir one episode on chat Gpt and other alike
Good
when UPI has gained so much popularity and reach even to the lowest street cart vendors, where is the need for digital currency? criteria should be to make all transactions official.
CBDC is the solution for black money.