CBDC-e₹ ‘A Virtual Currency’

Abstract

Money performs mainly Three Functions:

~ It is a Medium of Exchange (Facilitates Exchange between Two Parties).

~ It is having Store of Value (Stores Value from One Period to another), and

~ The Unit of Account (Acts as Numeraire of Value).

There are different Types of Money that performs the functions like:

~ Cash in Circulation.

~ Deposits at Commercial Banks.

~ Commercial Bank Reserves at Central Bank.

~ Privately Issued Assets, etc.

Not all of them are equivalent, some of them are Riskier than others in certain functions, and almost all of them are in Digital Form. Cash is an obvious exception; however, it features unique properties such as Anonymity, Universal Acceptance (within the given jurisdiction), and Instantaneous Exchangeability without the need of a Third-party Intervention.

In recent years, due to Innovations in the Technology, the concept of Digital Currency has emerged out of the desire of some private entities to replicate specific properties of Cash in the Digital Space. Digital Currencies have been issued in various Electronic Formats and Value Propositions, and in an Uncountable Number of Platforms, which allow for Real-Time, Peer-to-Peer and Not-in-Person Transactions.

Abbreviations:

BIS=Bank for International Settlements.

CBDC=Central Bank Digital Currency.

FPS=Fast Payment System.

NPS=National Payments System.

PSP=Payment Service Provider.