CDBC by the Reserve Bank of India: A blessing in disguise?

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Nirmala Sitharaman, the Finance Minister of India, publicly announced that India will be launching a central bank digital currency (CBDC) of its own by the beginning of the next financial year. This is a huge shock to multiple financial institutions seeing the current circumstances of the Indian economy, not a very intelligent move.

The central bank digital currency by the RBI is said to be similar to cash, with the public being able to use it without any limitations associated with traditional currency.

According to Nikhil Kamath, co-founder of Zerodha, "While many have been critical of #CBDC, we might be missing the big picture, remittances, unbanked economy, and reducing subsidy leakage, to name a few…When anything new comes into the market, the old need to adapt, and the new need to regulate the change."

This move is seen as a direct liability of the Reserve Bank of India. It will reduce the consumer’s dependency on the Indian Rupee. The Indian Rupee is already subject to constant fluctuations, which harms business and transactions. India is not well-developed in the international financial sector. This is majorly due to its large population.

There are many who have opposed the idea of CBDCs saying a centralised cryptocurrency is far from the original ideals of Bitcoin and the current crypto ecosystem. But David Donovan, executive vice president, financial services, Publicis Sapient, points out that such an attitude is at odds with what crypto enthusiasts have inherently worked towards.