CBDCs are being developed by 50 countries in the world. Almost an equal number of countries are exploring CBDCs. The US and UK are the laggards. As all interbank transactions are digital. it is easier in India to try CBDCs for wholesale transactions. The use of CBDCs by individuals, that is retail use of CBDCs, will be a step to supplement the cash.

CBDCs are going to be a part of the payment system. One can pay for products through a wallet. Several such wallets are in use in India. CBDCs will be one more such wallet. The RBI is likely to follow a centrally controlled database, as distributed ledger technology may not cope with the scale needed for Indian population.

CBDCs could be a step to make the society cashless. Sweden is the most cashless society — 98 per cent of the population uses digital payments such as credit/debit cards Norway follows suit. Here too 98 per cent transactions are digital. In Holland, 91 per cent transactions are cashless. Finland is going to be more and more cashless by 2030. Ireland is also going digital. China, the UK, S. Korea, Australia, the Netherlands and Canada are on the way of being more and more cashless.

The Central Banks world over would save the printing and administrative costs of handling the physical currency.

Central Banks are not favourable to private cryptos. That is one reason for them to introduce CBDCs. It is difficult to classify private cryptos — whether they are a commodity or an asset. They do not have sovereign backing. They are not subject to public scrutiny. As the KYC norms are not followed, these could be used for dubious transactions.

CBDCs would facilitate the cross-border remittances economically.

It is necessary to have international standards to ease interoperability of CBDCs.