Indian Digital Currency CBDC Touched 5 mn User Mark: RBI Report As part of the ongoing phase IV, CBDC is expected to play a big part in cross-border payments
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The Reserve Bank of India's Central Bank Digital Currency (CBDC) initiative has finally touched the five million user mark, almost two years since its pilot launch.
The apex banking body also reported it had onboarded 4.2 lakh (0.4 million) merchants for the initiative.
Notably, India is among the 36 countries, as of May 2024, where CBDC was in the pilot stage. CBDC wholesale and retail were launched in 2022 as a more efficient and cheaper currency management system. Its societal benefits include reduced dependency on cash, lower currency management cost, reduced settlement risk, financial inclusion, reduction in the cost of printing currency notes, environmental benefits, and creating a more secured and cost-effective settlement mechanism.
"Conceptually, CBDCs can induce changes in public's demand for currency; banking system deposits and credit; retail, wholesale and cross-border payments; and monetary policy implementation and transmission. CBDC can reduce transaction demand in deposits, as it brings down settlement risk, reducing the liquidity needs for settlement of transactions. At the same time, it can also reduce bank deposits affecting the credit creating capacity of commercial banks," read the report 'Report on Currency and Finance (RCF) for the year 2023-24'.
Notably, RBI crossed a speculated one-time milestone of one million transactions in a day on Dec. 27, 2023.
As part of the ongoing phase IV, CBDC is expected to play a big part in cross-border payments. "Central banks consider CBDCs as an opportunity to streamline and improve crossborder transactions, providing 24/7 settlement even outside closed-loop solutions or those controlled end-to-end by money transfer operators," the report also read.
According to the report India leads in global remittances and received USD 115.3 billion in 2023, contributing massively to the global figure of USD 857.3 billion.
