{"id":10411,"date":"2023-05-05T10:27:33","date_gmt":"2023-05-05T04:57:33","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=10411"},"modified":"2025-03-29T20:06:53","modified_gmt":"2025-03-29T14:36:53","slug":"what-is-a-central-bank-digital-currency-cbdc","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/what-is-a-central-bank-digital-currency-cbdc\/","title":{"rendered":"What is a Central Bank Digital Currency (CBDC)?"},"content":{"rendered":"<p><strong>About Central Bank Digital Currency (CBDC):<\/strong><\/p>\n<ul>\n<li>CBDCs are a <strong>form of digital currency issued by a country&#8217;s central bank<\/strong>.<\/li>\n<li>Examples of central banks include the Reserve Bank of India (RBI), the US Federal Reserve System, the Bank of Japan.<\/li>\n<li>CBDCs are <strong>similar to stablecoins<\/strong>, except that <strong>their value is fixed by the central bank and equivalent to the country&#8217;s fiat currency.<\/strong><\/li>\n<li><strong>Advantages<\/strong>:\n<ul>\n<li>It provides businesses and consumers with <strong>privacy, transferability, convenience, accessibility, and financial security.\u00a0<\/strong><\/li>\n<li>It also <strong>decreases the cost of maintenance<\/strong> that a complex financial system requires.<\/li>\n<li>It <strong>reduces cross-border transaction costs<\/strong>.<\/li>\n<li>It would also r<strong>educe the risks associated with using digital currencies, or cryptocurrencies, in their current form.<\/strong> <strong>CBDCs, backed by a government<\/strong> and controlled by a central bank, would give households, consumers, and businesses <strong>a secure means of exchanging digital currency<\/strong>.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h3>What are Stablecoins?<\/h3>\n<ul>\n<li>They are <strong>cryptocurrencies whose value is pegged<\/strong> or tied <strong>to that of another currency,<\/strong> <strong>commodity, or financial instrument<\/strong>.<\/li>\n<li>Stablecoins <strong>aim to provide an alternative to the high volatility<\/strong> <strong>of<\/strong> the most popular <strong>cryptocurrencies<\/strong>, including Bitcoin (BTC).<\/li>\n<li><strong>Unlike cryptocurrencies<\/strong> like Bitcoin, <strong>stablecoins\u2019 prices remain steady<\/strong> in accordance with whichever fiat currency backs them.<\/li>\n<li>E.g., <strong>USDC stablecoin<\/strong> is <strong>backed by dollar<\/strong>-denominated assets.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<hr \/>\n<h3>Q1)\u00a0What are Cryptocurrencies?<\/h3>\n<p>A cryptocurrency is a digital or virtual currency secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. Many cryptocurrencies are decentralized networks based on blockchain technology\u2014a distributed ledger enforced by a disparate network of computers.<\/p>\n<p><strong>Source:<\/strong>\u00a0<a href=\"https:\/\/www.investopedia.com\/terms\/c\/central-bank-digital-currency-cbdc.asp\" target=\"_blank\" rel=\"nofollow noopener\"><u>RBI\u2019s Shankar urges increased adoption of CBDC for efficient cross-border payment<\/u><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>CBDCs are a form of digital currency issued by a country&#8217;s central bank.<\/p>\n","protected":false},"author":5,"featured_media":10412,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":{"0":"post-10411","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-prelims-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/10411","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=10411"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/10411\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/10412"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=10411"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=10411"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=10411"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}