Assessing the viability of an Indian Central Bank Digital Currency (CBDC)

Authors

DOI:

https://doi.org/10.55763/ippr.2022.03.03.003

Abstract

A large number of Central Banks around the world are planning to introduce Central Bank Digital Currencies (CBDCs) as a legal tender in their countries. The Reserve Bank of India (RBI) has also revealed similar plans, with an Indian CBDC expected in the near future. Any evaluation of such a major change in the nature of money requires a broader understanding of the opportunities and challenges arising from the adoption of CBDCs. In this paper, we discuss these issues at the conceptual level and specifically in the Indian context. We show that the conceptual issues can be characterised in three ways – monetary sovereignty issues, issues from the point of view of national sovereignty, and developmental issues. In the Indian context, we analyse these issues from the perspective of the rapid digitalization taking place in the country. Finally, we discuss the steps that the RBI needs to take in order to introduce an Indian CBDC.

Keywords:

CBDC, Monetary Sovereignty, Disintermediation, Dollarization, Financial Inclusion, Cryptocurrencies

Authors Bio

Priyadarshini D, Carnegie Endowment for International Peace India

D Priyadarshini is an Associate Fellow at the Carnegie Endowment for International Peace India

Sabyasachi Kar , Institute of Economic Growth

Sabyasachi Kar is RBI Chair Professor at the Institute of Economic Growth.

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Published

2022-05-20