Page 25 - Banking Finance November 2025

ARTICLE

The Programmable

eRs: Where code

meets currency

Master Abhishek
Chief Manager
Union Bank Knowledge Centre
Bengaluru

This higher level of trust and speed could open up new business models and encourage new ideas,
especially in areas that are ready to be automated. Various organisations are already testing
programmable allowances for things like newspaper allowances, which shows how this technology
can be used in real life in company finance.

Introduction tal code, unlike the cash we carry around with us or the
transactions in our bank accounts that don't change. These
The global financial landscape is on the edge of a sweeping
transformation with the emergence of Central Bank Digital rules say how, when and by whom the money can be used
Currencies (CBDCs). While this concept of a digital form of and viewed. They are usually powered by advanced smart
contract technologies that are similar to those found in
fiat money issued by a central bank is gaining traction, a
particularly innovative and fascinating feature is "program- decentralized blockchain networks. Let us see few examples
of Programmable CBDC:
mability."
Case 1: Let us Imagine that farmers receive government
The idea of programmability or Programmable CBDC is not subsidies for fertilizers that can only be used at authorized
just about making a digital version of the rupee, but it is a fertilizer stores against purchase of fertilizers.
leap forward to make the Indian rupee dynamically intelli- Case 2: Self-Help Groups receive micro-loans in instalments,
gent which has the potential to transform the country's huge with each payment depending on the successful completion
economy, making the people to access the money differ- of a specific operational or business milestone that is con-
ently, making subsidy drops efficient and much more. It's firmed through digital channels. With this built-in intelli-
about making a digital rupee that can act on its own based gence, money goes from being a passive way to share goods
on preset rules. This will allow for unprecedented speed, and services to being an active part of the economy.
accuracy and policy effectiveness.
Case 3: Term Loan is getting disbursed to the borrower, but
the money can be utilised only for transfer of funds to a
How is it different to normal CBDC? business of specific activity.
The main feature that makes a Programmable CBDC differ-
ent from other types of money is that it can work automati- These cases are very general, but the effects are far reach-
cally. Programmable money has directions built into its digi- ing. There are many strong reasons for India to look into

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