Weighing central bank digital currencies against crypto

THE subject of central bank digital currencies (CBDCs) versus the open world of cryptocurrencies now represents an important political and financial battle. While cryptocurrencies such as Bitcoin have proliferated around the world, central banks have woken up to the possibility that the currencies they issue could be undermined or even replaced by the new cryptocurrencies.

Although most central banks have not come out with a flat condemnation of cryptocurrencies, most have started studying their own digital currencies. Almost all central banks around the world have CBDC studies underway or have already created their own CBDC.

The Reserve Bank of India (RBI) directly condemned cryptocurrencies and came out in favour of CBDC. In late 2023, RBI chief Shaktikanta Das said cryptocurrencies posed significant risks to emerging markets and flatly stated that the central bank’s stand on the issue remains unchanged despite wider acceptance in other countries.