What is Central Bank Digital Currency (CBDC)? Discuss the advantages and disadvantages of CBDCs

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Q) What is Central Bank Digital Currency (CBDC)? Discuss the advantages and disadvantages of CBDCs. (15 marks, 250 words)

सेंट्रल बैंक डिजिटल करेंसी (सीबीडीसी) क्या है? सीबीडीसी के फायदे और नुकसान पर चर्चा कीजिये।

Demand of question: This question requires understanding of the concept of Central Bank Digital Currency.

Directive Word:

Discuss– Discussing something requires having a conversation where you share reasons supported by proof to support both sides of an idea, and then coming to a decision.

Structure of the Answer:

Introduction:

Give a current context of origin of this concept.

Body:

First, explain what this concept means.

Then explain the advantages and disadvantages of CBDC.

Conclusion:

Conclude by giving a way forward as to how the disadvantages can be overcome and global best practices if any.

Part of Syllabus: Achievements of Indians in Science & Technology; Indigenization of Technology and Developing New Technology.