Critically discuss the possible implications of the Central Bank Digital Currency (CBDC) recently launched by the RBI.

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Q) “Critically discuss the possible implications of the Central Bank Digital Currency (CBDC) recently launched by the RBI.(15 marks, 250 words)

आरबीआई द्वारा हाल ही में शुरू की गई सेंट्रल बैंक डिजिटल करेंसी (CBDC) के संभावित निहितार्थों की आलोचनात्मक चर्चा करें।“

Demand of the Question– The question demands understanding of the concept of money and Digital currency, its functioning, implications, advantages and challenges.

Directive Word- Critically discuss- This keyword demands mentioning the details along with analyzing both pros and cons, with almost equal weightage.

Structure of the Answer

Intro– Define and describe what is CBDC. Mention the recent context.

Body– In the first part, mention the details of CBDC, along with its usage with examples. In the second part, mention the advantages of CDAC, along with scenarios and examples. In the third part, mention the challenges of the same, since the keyword is critically discussed, almost equal parts of the answer should cover advantages and challenges. In the last section, suggest ways to tackle the challenges.

Conclusion– Conclude by mentioning the usage and how it will benefit the economy as a whole as well as individuals. Also incorporate some suggestions for betterment.

Part of Syllabus– GS Paper -3- Indian Economy