Central bank digital currencies: policy and operational perspectives for India

Cryptocurrencies are an innovation that brings together computing, networking and an incentive regime to create secure, decentralized, peer-to-peer digital currency that lends itself to be used as a medium of exchange and as storage of value. Most Central Banks have been reluctant to permit cryptocurrencies considering risks to the financial system, and have veered towards Central Bank Digital Currency or ‘Digital Fiat’ that shares several advantages of cryptocurrencies but are entirely mandated and managed by the Central Bank. This paper examines provides a background to CBDCs and discusses some of the policy and operational aspects that an Indian CBDC launch should consider.