Route To A Central Bank Digital Currency

Many countries are experimenting with launching their own official digital currencies, but they have various risks and challenges

- Subhash Chandra Garg, Former Finance Secretary, Government Of India

BITCOIN, THE MOST famous cryptocurrency, was unleashed to the world in 2009 as a digital currency. However, it is not ideal as its value in terms of other official currencies like the US dollar and the Indian rupee keeps fluctuating. Cryptocurrencies in another form—more commonly called stablecoins like USD Tether, USDT, USD Coin or USDC—have acquired the character of an international currency.

These stablecoins tied in value to the US dollar are being used extensively for making international money transfers and payments.

The use of cryptocurrencies in crypto platforms is also becoming quite significant. Ether, the cryptocurrency of the blockchain platform Ethereum, is essentially meant for transactions on the Ethereum platform only.

Irrespective of their objectives, utility or use case, cryptocurrencies have established that it is possible to transform currencies into digital form.

Central Bank Digital Currency

Many countries have realised that it is time to issue currency in a digital form. The fact that private cryptocurrency innovators could successfully design and operate virtual or digital currencies, such as Bitcoin or stablecoins, has made many countries realise that they could launch their own digital currencies—the Central Bank Digital Currencies or CBDCs. Most are experimenting with their official digital currencies in the form of cryptocurrency.