{"id":36200,"date":"2025-01-25T19:47:27","date_gmt":"2025-01-25T14:17:27","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=36200"},"modified":"2025-01-25T19:47:28","modified_gmt":"2025-01-25T14:17:28","slug":"cbdc-ban-in-us","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/25-01-2025\/cbdc-ban-in-us","title":{"rendered":"Donald Trump Bans CBDC in US"},"content":{"rendered":"\n

Syllabus: GS3\/ Economy<\/strong><\/p>\n\n\n\n

In News<\/strong><\/h2>\n\n\n\n
    \n
  • Recently, the US President through its executive order banned the creation and use of<\/strong> Central Bank Digital Currency (CBDC)<\/strong> and emphasizes the development of dollar-backed stablecoins, a private-sector alternative to CBDCs.<\/li>\n<\/ul>\n\n\n\n

    Why has the US banned CBDC?<\/strong><\/h2>\n\n\n\n
      \n
    • Privacy Concerns:<\/strong> CBDCs could enable government surveillance over individual transactions.<\/li>\n\n\n\n
    • Financial Sovereignty: <\/strong>Avoids centralization of the financial system under the federal government.<\/li>\n\n\n\n
    • Support for Decentralization:<\/strong> Promotes innovation in private-sector digital assets like stablecoins.<\/li>\n<\/ul>\n\n\n\n

      What is CBDC?<\/strong><\/h2>\n\n\n\n
        \n
      • Definition:<\/strong> CBDC refers to the digital form of a nation\u2019s sovereign currency<\/strong>, issued and regulated by its central bank. Unlike cryptocurrencies, which are decentralized, CBDCs are centrally managed and backed by the government.<\/li>\n\n\n\n
      • Types of CBDCs:<\/strong>\n
          \n
        • Wholesale CBDCs<\/strong>: Designed for institutional use<\/strong>, facilitating large-scale transactions such as interbank transfers, cross-border payments, and securities settlements.<\/li>\n\n\n\n
        • Retail CBDCs<\/strong>: Intended for everyday use<\/strong> by individuals and businesses. For example: Token-based (accessed with private and public keys) <\/strong>& Account-based<\/strong> ( requires digital identification).<\/li>\n<\/ul>\n<\/li>\n\n\n\n
        • Features of CBDCs:\u00a0<\/strong>\n
            \n
          • Legal Tender: <\/strong>Recognized as a medium of payment and store of value by all citizens, businesses, and government agencies.<\/li>\n\n\n\n
          • Liability:<\/strong> Represents a direct liability of the central bank, unlike deposits with commercial banks.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n

            Benefits of CBDC<\/strong><\/h2>\n\n\n\n
              \n
            • Lower Transaction Costs:<\/strong> Reduces costs associated with cash handling and traditional banking systems.<\/li>\n\n\n\n
            • Transparency: <\/strong>Tracks transactions to reduce corruption, money laundering, and tax evasion.<\/li>\n\n\n\n
            • Crisis Resilience: <\/strong>Serves as a reliable payment method during natural disasters or pandemics.<\/li>\n\n\n\n
            • Global Trade Efficiency: <\/strong>Simplifies cross-border payments and reduces intermediaries.<\/li>\n\n\n\n
            • Eco-Friendly:<\/strong> Eliminates the need for physical cash, reducing environmental impact.<\/li>\n\n\n\n
            • Safe and Stable:<\/strong> Government-backed and regulated, offering a secure alternative to volatile cryptocurrencies.<\/li>\n\n\n\n
            • Reduced Banking Risks:<\/strong> Prevents panic withdrawals during crises and enhances security.<\/li>\n<\/ul>\n\n\n\n

              India\u2019s CBDC: E-Rupee<\/strong><\/h2>\n\n\n\n
                \n
              • Launch of e-Rupee: <\/strong>Introduced by the Reserve Bank of India (RBI) in 2022<\/strong>.<\/li>\n\n\n\n
              • Usage: <\/strong>Facilitated through e\u20b9 wallets<\/strong> offered by banks and non-banks.<\/li>\n\n\n\n
              • Supports person-to-person (P2P)<\/strong> and person-to-merchant (P2M)<\/strong> transactions.<\/li>\n\n\n\n
              • Rationale for e-Rupee\n
                  \n
                • Digital Transformation<\/strong>: Aims to modernize the monetary system and reduce dependence on physical cash.<\/li>\n\n\n\n
                • Cost Reduction<\/strong>: Minimizes the costs of cash handling and issuance.<\/li>\n\n\n\n
                • Global Competitiveness<\/strong>: Aligns with global trends in digital finance to enhance economic inclusion.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n

                  Source: LM<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

                  Recently, the US President through its executive order banned the creation and use of Central Bank Digital Currency (CBDC) and emphasizes the development of dollar-backed stablecoins, a private-sector alternative to CBDCs.<\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-36200","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\/36200","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\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=36200"}],"version-history":[{"count":1,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/36200\/revisions"}],"predecessor-version":[{"id":36201,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/36200\/revisions\/36201"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=36200"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=36200"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=36200"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}