Our central bank digital currency can be the next UPI
₹15.8 trillion, UPI is a big success. With countries like Singapore, Malaysia, the UAE, UK and France accepting UPI linkages, India has impressed others with its financial regulatory system and technology capabilities. India is also pushing for inroads with other dependable offerings, including RuPay, which dominates the domestic debit cards market with over 860 million transactions, worth over ₹1.6 trillion.
India’s efforts to promote its CBDC are based on a deep understanding of domestic financial realities and a desire to promote payments sovereignty abroad. Let us look at five factors that will be central to this push: Next stage of financial inclusion: CBDCs can play a pivotal role in extending financial services to unbanked and under-banked populations. Just as the UPI brought millions of Indians into the fold of digital payments, countries like China (with its digital currency electronic payment system) have shown the potential of CBDCs in reaching marginalized communities.
It has been used in remote areas for welfare distribution, thus providing the unbanked with access to bank services. If UPI gained popularity for being ‘easy to operate,’ a CBDC will woo many more with its ‘easier to understand and operate’ aspects, making it the perfect finale of financial inclusion after Jan Dhan and UPI. Reduced transaction costs: Structural simplicity ensures that CBDCs can drastically lower transaction fees and processing costs.
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