Few of the experiments that are being done on digital currency have been facing some obstacles and are now serving as lessons for the RBI (Reserve Bank of India) which has planned to launch their own CBDC (Central Bank Digital Currency) from next fiscal year.
A digital currency that was being used by around 7 Caribbean Nations has experienced some glitches recently that have kept it offline for over a month. CBDC is a legal tender similar to the fiat currency that is issued on paper and is interchangeable with any other fiat currency, which will be issued by a central bank in a digital form. The Reserve Bank of India is expected to launch its own CBDC in the upcoming fiscal year. This is in line with the plans of the Indian government to launch the digital currency that will be backed by blockchain technology.
CBDC aims to provide users with convenience and security of the digital currency along with the regulated, reserve-backed circulation of the traditional banking system. As per reports, nine nations or currency unions have launched their digital currencies, 15 amongst these are in the initial stages only. Further, 16, which includes India are in the development stage, and 40 are in the research stages as well. Seven of them have been inactive and two got cancelled with no plans to launch it.
Among the nine countries that have launched their digital currencies are the seven Caribbean nations, the Bahamas, and Nigeria. Those in the pilot stages include Saudi Arabia, South Africa, the United Arab Emirates, China, Sweden, Malaysia, Russia, Singapore, and Thailand. The Bahamas was the first country to launch its CDBC in 2020 and had called it Sand Dollar.
China has also launched the e-CNY, which is the digital form of their currency Chinese Yuan, at the Beijing Winter Olympics. As per some reports, it was being used to make more than 2 million Yuan of payments every day. Bloomberg has reported that the digital version of the East Caribbean dollar which is called DCash has now been offline for over a month and it could take several more days to get restored. The glitches in the recent past have made the financial sector experts all around the world call for a central bank to make necessary preparations for the allowance of enough leeway to banks and other stakeholders in the financial services to make their systems ready to deal with the digital currencies and further, develop solutions to the problem as they develop.
The speculative nature of private and digital cryptocurrencies like Ether, bitcoin etc. is what has been pushing many Central banks across the world into adapting their own digital currencies.
