A Systematic Study of Central Bank Digital Currency

Abstract

This chapter examines central bank digital currencies (CBDCs) and their possible impact on the Indian economy in an age of digitization. Commercial value, user experience, legal frameworks, and financial stability are crucial to understanding digital currencies. CBDCs are a new payment infrastructure frontier. The chapter emphasizes the significant investments needed to build a large user and merchant network, highlighting the far-reaching effects of digital currencies. This exploration aims to demystify CBDCs as electronic variants of fiat currency. CBDCs, issued by central banks as legal money, are versatile and available to the public, financial institutions, and businesses for savings and transactions. The study describes the rise of digital cash by tracing currency from early barter systems to physical notes and coins. It admits initial skepticism about digital currencies due to their volatility, diversity, and lack of official backing.