CURRENT AFFAIRS

Detailed explanation-1: -Central Bank Digital Currency (CBDC) pilot launched by RBI in retail segment has components based on blockchain technology. The Reserve Bank of India (RBI) has issued a concept note on Central Bank Digital Currency (CBDC) on October 7, 2022.

Detailed explanation-2: -Concept note places CBDC as a digital form of currency notes which are issued by the Reserve Bank, same as cash but in digital form which can be used as a medium of exchange. The concept note includes the objectives, structure choices, benefits, and risk related with issuing CBDC in India.

Detailed explanation-3: -On 3 November 2022, the Monetary Authority of Singapore launched an expanded collaboration with international partners on cross-border foreign exchange settlement using a wholesale CBDC.

Detailed explanation-4: -While some may assume that CBDCs are a new concept, they have in fact been around for three decades. In 1993, the Bank of Finland launched the Avant smart card, an electronic form of cash. Although the system was eventually dropped in the early 2000s, it can be considered the world’s first CBDC.

Detailed explanation-5: -Why is RBI introducing CBDC? “CBDC is aimed to complement, rather than replace, current forms of money and is envisaged to provide an additional payment avenue to users, not to replace the existing payment systems,” the regulator said.