Central Bank Digital Currency (CBDC) and Blockchain

The digital currencies issued by central banks are called CBDCs. The privately issued digital currencies use blockchain technology. However, this may not be suitable for CBDCs, since it consumes huge amount of electric power. Blockchain happens to be power-hungry, though it is the most efficient system. The settlement time is higher. Even other countries developing CBDCs are not using blockchain. There could be an arrangement where RBI and banks could use blockchain. While distributing to public, banks can use other technologies to transact with the customers. Central Bank can directly issue to the public, or in wholesale format, via other banks.

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