Page 109 - BFSI CHRONICLE 10 th Issue (2nd Annual Issue ) .indd
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BFSI Chronicle, 2 Annual Issue, 10 Edition July 2022
th
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Networked electronic resources are blockchain network that anyone may
benefited both CBDCs and crypto to create, access. Cryptocurrencies can be used for
validate and track the transactions. Even speculation and financial transactions.
though, various CBDCs have a central There is no central authority that can
database which is regulated by a Central regulate their use.
Bank which issues a unique serial number Advantages of CBDC:
to each ‘e-coin’ which is considered a way
to identify it. The first benefit is the potential for a
more efficient payment system in areas
Difference between CBDC and Cryptocur- where managing currency is expensive.
rency: The possibility of a more efficient
Thousands of virtual currencies, often payment system in areas where the cost
known as cryptocurrencies, have already of keeping currency is considerable is the
been created. These are not government- first advantage.
related but may be centralized. One of Second, because CBDC does not require
the best examples of fully decentralized
users to have a bank account, it has the
cryptocurrencies is Bitcoin and Bitcoin potential to increase financial inclusion.
competitors.
Because CBDC does not require
Cryptocurrencies are based on customers to have a bank account, it
distributed ledger technology, which has the potential to increase financial
means that several devices throughout inclusion. One of the most important
the world rather than a single central benefits which CBDCs will provide is
hub are constantly validating the the expansion of financial inclusion.
transaction’s accuracy. Even today, a large portion of the global
population lacks access to financial
CBDC is a centralized digital currency
services. Remote places in impoverished
controlled by a central bank, with or poor countries, for example, plainly
a blockchain network that can only indicate constraints on bank account
be accessed and interacted with by
access.
certain financial institutions with the
appropriate permissions. If a currency is unavailable for any reason,
the CBDC might ensure that people have
CBDCs can only be used for payment,
easy access to legal tender. Cash and
and any sort of stockpiling or investing CBDC should have legal recognition as
is outright prohibited. Cryptocurrencies
a valid method of payment if they were
are decentralized digital assets issued as a legal currency.
maintained on a public, permissionless
The Institute Of Cost Accountants Of India
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