Evolution, sovereignty and regulation: the global and the Indian story of CBDC

Abstract

Central Bank Digital Currencies (CBDCs) are no more conceptual offerings. They have moved to be an integral part of the monetary systems of countries. Central Banks have moved ahead from experimenting to giving structure to it technically as well building guidance and regulations around it. This chapter traces the global evolution of CBDCs covering the initial experiments in the 1990s, covering the juxtaposition against cryptocurrencies, to the present stage of implementations woven by due regulations. It covers various international experiments from the Bahamas, to the US of A, China and EU. It also evaluates the responses and the guidance of the large relevant Institutions like the IMF and BIS covering multiple aspects like transparency, confidence levels of users, inclusivity, financial inclusion, possible concerns and sovereignty.
Keeping the international developments in the background, the paper peeks into India’s journey in sufficient details. It analyses the journey of e₹ through the Institutional as well as Consumer’s lens. The authors also compare the same in the context of the existing payment mechanism systems prevalent in India.
The chapter makes in-depth pursuit of the evolving regulatory aspects and federal jurisdictions. In all, the chapter contributes to the growing literature on digital public infrastructure by positioning CBDCs as a foundational transformation in the future of money and payments systems.