'CBDC a Wonderful Opportunity and Great Motivation for Most Central Bankers' According to Ajay Kumar Choudhary, Executive Director, RBI, CBDC is a great motivation for most of the central bankers including RBI to bring it as an alternative for the customers to use it as per their choice and convenience.
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The recent times has seen a considerable surge in the popularity of digital currencies. Consider this: In 2020, there were only 35 countries planning to shift to Central Bank Digital Currencies (CBDCs), but by March 2022, nearly 87 countries/territories considered issuing them. Out of them, about nine countries have already launched their centrally governed digital currencies, including India.
Ajay Kumar Choudhary, Executive Director, RBI who took to the stage, on the second day of Global Fintech Fest 2023 said that CBDC is a wonderful opportunity and is a great motivation for most of the central bankers including RBI to bring it as an alternative for the customers to use it as per their choice and convenience.
"CBDC is a digital form of Indian currency and has all characteristics of a currency: trust, immediate settlement, and final day. All these features are what currency can have by way of store of value, means of payment or unit of account. In addition, it also carries the advantages of being digital. Therefore, it's a wonderful opportunity," said Choudhary.
Choudhary, however, said that it is not wise to compare it with UPI. "Generally, I hear that people try to compare it vis-a-vis the payment system like UPI. But UPI is a payment system. On the payment side, CBDC is as efficient or as good as UPI can be. It is no better but it can have multiple use cases by way of a store of value. For the wholesale CBDC, if you look at there can be settlement finality because the central bank currency is not the commercial bank money. And when we look at settlement guarantee requirements that can remove cross-border transactions this would be a great enabler in incoming days because you are aware that at this point of time in the correspondent banking system, multiple banks are involved in making this type of transaction happen," adds Choudhary.
But it involves cost as well. According to World Bank estimates, the cost is around 6% for the retail transactions, for this type of overseas remittances etc. For the big and large value remittances, only three or four banks globally operate. "That's why we need certain systems which can counter the narrative of the crypto and stable coins, can have no risk like them. At the same time, it can provide the features of all those things that digital currency can provide," notes Choudhary.
