Page 39 - Banking Finance October 2025

ARTICLE

given the inter-island connectivity issues. Nigeria launched ing a robust regulatory framework that addresses risks re-
e-Naira in October 2021-a central bank fiat currency-for lated to digital currencies like money laundering and ter-
retail use, with an intermediated, full accounting architec- rorism financing.
ture principally to counter the threat of bank
disintermediation posed by wide adoption of private crypto Technology Adoption: Emphasis on adopting a technology
currencies for international payments and transfers. stack that is scalable, resilient, and capable of
interoperating with existing financial infrastructures.
Jamaica is the latest country to launch a CBDC, the JAM-
DEX. As of June 2023, 11 countries have adopted central Stakeholder Engagement: Engaging with various stake-
bank digital currencies (CBDC), with an additional 53 being holders, including banks, fintech companies, and consum-
in advanced planning stages including EU, Japan, Australia, ers, to gather insights and ensure a smooth transition.
India, Iran, Turkey, Canada, Venezuela, and Brazil and 46
researching the topic. According to data from the Atlantic These initiatives are indicative of the RBI's commitment to
Council, The US remains in the research category with 46 embracing digital innovation while maintaining a tight grip
other countries. on the reins of monetary control. Furthermore, the RBI has
expressed its intent to pilot a phased implementation strat-
The Emergence of CBDCs in India egy for the CBDC to evaluate its impact on the economy
The introduction of Central Bank Digital Currencies (CBDCs) and the banking sector. This cautious yet progressive ap-
in 2022 represents a transformative shift in the financial proach allows the RBI to:
infrastructure of India. With RBI at the helm, the potential Assess Use Cases: Carefully assess various use cases for
for CBDCs to enhance the efficiency of the payment system the CBDC and understand its implications on the pay-
is significant. CBDCs can provide a gateway for unbanked ment systems.
populations to enter the formal financial system, thereby Monitor Risks: Continuously monitor and manage po-
promoting inclusivity. The seamless and real-time process- tential risks to make sure there's a secure and stable
ing of transactions can reduce the reliance on cash and financial environment.
traditional banking networks. With CBDCs, the RBI could Adapt Policies: Adapt and fine-tune policies as needed
have more precise control over the money supply and the based on the data and feedback received during the
implementation of monetary policy. CBDCs can mitigate pilot phases. By taking these steps, the RBI aims to
risks associated with physical cash management and the position India at the forefront of the digital currency
potential for fraud in digital transactions.
revolution, while safeguarding the interests of all stake-
holders involved.
As the RBI continues to explore the CBDC landscape, the
strategic implementation of this digital currency will be Integrating CBDCs with India's Existing Payment Systems is
crucial in ensuring that it supports the broader goals of eco- of core importance, while implementing it. India's financial
nomic stability and growth. The Reserve Bank of India (RBI) ecosystem is on the brink of a transformative leap with the
has been closely monitoring the evolving landscape of digi- potential integration of Central Bank Digital Currencies
tal currencies, recognizing the potential they hold for the (CBDCs). Spearheaded by the Reserve Bank of India (RBI),
future of finance. In its strategic approach, the RBI has this integration is poised to enhance the robustness and
been cautious, yet forward-thinking about the integration
efficiency of the nation's payment systems. Key consider-
of Central Bank Digital Currencies (CBDCs) into the nation's
ations for a seamless amalgamation include: 1-
financial ecosystem. The central bank's primary consider-
Interoperability with Unified Payments Interface (UPI) and
ations revolve around financial stability, security, and con- other existing digital payment platforms. 2-Ensuring mini-
sumer protection, ensuring that any implementation aligns mal disruption to the current financial infrastructure. 3-
with the broader objectives of the country's monetary policy. Adoption of advanced security protocols to safeguard
against cyber threats.
Among the key strategic moves made by the RBI,
the following points stand out: With the advent of Central Bank Digital Currencies (CBDCs),
Regulatory Framework: The RBI is working on establish- the Reserve Bank of India (RBI) is faced with the dual chal-

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