{"id":32063,"date":"2024-11-12T18:34:05","date_gmt":"2024-11-12T13:04:05","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=32063"},"modified":"2024-11-12T18:34:06","modified_gmt":"2024-11-12T13:04:06","slug":"europes-digital-euro","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/12-11-2024\/europes-digital-euro","title":{"rendered":"Europe\u2019s Digital Euro"},"content":{"rendered":"\n<p><strong>Syllabus: GS3\/Economy<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>The European Central Bank (ECB)<\/strong> is about to start the trial phase for its Digital currency, its<strong> \u201cpreparation phase\u201d <\/strong>commenced in 2023.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Digital Euro<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>A digital euro would be a <strong>digital form of cash,<\/strong> issued by the <strong>central bank and available to everyone in the euro area, <\/strong>available<strong> free of charge to everyone.<\/strong><\/li>\n\n\n\n<li>It will be accessible and accepted in all euro area countries.<\/li>\n\n\n\n<li>The <strong>currency <\/strong>is meant to be the <strong>government\u2019s alternative to existing cashless options <\/strong>such as <strong>credit cards, apps, cryptocurrencies, and bank transfers.\u00a0<\/strong><\/li>\n\n\n\n<li><strong>Digital euro<\/strong> can be used to pay <strong>directly from a digital wallet, <\/strong>on a smartphone or computer, <strong>without involving a bank or payment gateway.\u00a0<\/strong><\/li>\n\n\n\n<li>The <strong>digital euro differs from other types of digital payment options<\/strong> because the ECB issues it directly.\u00a0<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What is Digital Currency?<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Digital currency refers to any form of money or currency that is stored and transacted electronically.\u00a0<\/li>\n\n\n\n<li>Unlike physical currencies like coins or paper bills, digital currencies exist purely in digital form and can be used for online transactions.\u00a0<\/li>\n\n\n\n<li>There are two main types of digital currencies:\n<ul class=\"wp-block-list\">\n<li><strong>Cryptocurrency:<\/strong> This is a decentralized form of digital currency that uses cryptographic techniques for security and operates on blockchain technology. Examples include Bitcoin, Ethereum, Ripple (XRP), and Litecoin.\n<ul class=\"wp-block-list\">\n<li>It is not controlled by government or a central bank, making them different from traditional money.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Central Bank Digital Currency (CBDC):<\/strong> This is a digital form of currency issued and regulated by a central bank.\n<ul class=\"wp-block-list\">\n<li>It represent a country&#8217;s official currency in digital form.\u00a0<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Digital currencies offer several advantages:<\/strong>\n<ul class=\"wp-block-list\">\n<li>faster transactions,\u00a0<\/li>\n\n\n\n<li>reduced transaction fees,\u00a0<\/li>\n\n\n\n<li>and the ability to conduct global transactions without intermediaries.\u00a0<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Digital Currency in India<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>India&#8217;s digital rupee, also referred to as <strong>eRs or eINR,<\/strong> is a central bank digital currency (CBDC) issued by the <strong>Reserve Bank of India (RBI).<\/strong><\/li>\n\n\n\n<li>The RBI initiated the <strong>e-rupee pilot,<\/strong> a digital counterpart to physical currency, in 2022.\u00a0<\/li>\n\n\n\n<li><strong>The RBI is exploring two types of digital currencies:<\/strong>\n<ul class=\"wp-block-list\">\n<li><strong>Wholesale CBDC (e\u20b9-W): <\/strong>This is aimed at improving the efficiency of interbank settlements and payments between banks and financial institutions.<\/li>\n\n\n\n<li><strong>Retail CBDC (e\u20b9-R):<\/strong> This is aimed at the general public for retail transactions, similar to how people use physical currency today.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Features<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>It represents a tokenized digital version of the Indian rupee, operating on <strong>blockchain or distributed ledger technology.<\/strong><\/li>\n\n\n\n<li>It serves as<strong> legal tender,<\/strong> accepted by individuals, businesses, and governmental bodies.\u00a0<\/li>\n\n\n\n<li>It is issued<strong> in accordance with the RBI&#8217;s financial policies<\/strong> and can be converted into physical cash through commercial banks.<\/li>\n\n\n\n<li>Transactions using the digital rupee are processed <strong>more quickly and securely <\/strong>compared to traditional banking systems.\u00a0<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Significance<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Replacement for cash:<\/strong> While UPI allows to transfer money among individuals or businesses, e\u20b9 can be used for purchases to FDs.<\/li>\n\n\n\n<li><strong>Control:<\/strong> e\u20b9 can be controlled by the RBI to be used for specific purposes only &#8211; such as subsidies or other expenses, exclusively. This is unlikely to be a direct transfer that may be misused.<\/li>\n\n\n\n<li><strong>Lower costs: <\/strong>By bypassing intermediaries like credit cards or debit cards, the E rupee could lead to lower transaction fees.<\/li>\n\n\n\n<li><strong>Financial inclusion:<\/strong> E-rupee accounts held directly with the central bank could offer a low-cost or free option for those without access to traditional banks.<\/li>\n<\/ul>\n\n\n\n<p><strong>Source: <\/strong><a href=\"https:\/\/www.thehindu.com\/sci-tech\/technology\/the-underbelly-of-europes-digital-euro\/article68855575.ece\" target=\"_blank\" rel=\"noopener\"><strong>TH<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The European Central Bank (ECB) is about to start the trial phase for its Digital currency, its \u201cpreparation phase\u201d commenced in 2023.<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-32063","post","type-post","status-publish","format-standard","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/32063","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=32063"}],"version-history":[{"count":1,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/32063\/revisions"}],"predecessor-version":[{"id":32064,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/32063\/revisions\/32064"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=32063"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=32063"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=32063"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}