Introducing digital currency

28 MAR,2021 | MEDC


 

There is no need to be overawed by cryptocurrencies. They use massive amounts of electric power, not just for their mining, but also for maintaining their sprawl of ledgers distributed across cyberspace for usage validation. Such blockchain operations offer transactional security, but at a high cost, which is unaffordable for most developing economies. Central banks around the world, including the RBI, are toying with the idea of digital currencies. They certainly have their benefits. An official digital currency could grant its issuer tighter monetary control in a cashless economy of the future. This is especially true in specific circumstances, such as when negative interest rates need to be imposed on savers in a low-inflation scenario. Without cash, people would have to accept whatever terms are laid down by their Central Bank. Obviously, RBI cannot launch a digital currency without an in-depth cost-benefit analysis. However, we need to start moving in that direction, just in case our economy evolves to gain from it. 

*Photo Credit: Google

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