Q.3 Several central banks have been toying with the idea of central bank digital currency (CBDC) while some have already introduced it. What are the key area of priorities which will be benefited by CBDC? What are the challenges CBDC faces in addressing the issues? (10 Marks)

Mentor’s comment-
  • https://indianexpress.com/article/opinion/columns/india-path-to-a-digital-rupee-7624607/
  • In the intro, mention Nigeria joining the list of countries that introduced CBDC.
  • In the body mention the areas in which it can help especially in developing economies-  to make domestic payments systems and cross-border remittances cheaper, faster and more efficient, and deepen financial inclusion. In challenges mention matching domestic priorities and design features, challenges posed by interest-bearing CBDC such as maintaining larger balance sheets etc.
  • Conclude by mentioning the need to balance the benefits with the risks in the introduction of CBDCs.
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Siddharth CHATURVEDI
Siddharth CHATURVEDI
21 days ago

Razor ID: #0000466569

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