• UGI USER
  • May 07, 2024
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PERMANENTLY DELETING LOGS CAN HELP MAKE E-RUPEE ANONYMOUS’

Why in the news?

RBI Governor suggests permanent transaction deletion to enhance e-rupee anonymity, aiming to match paper currency’s level of privacy.

source:enterslice

About the RBI Governor’s Remarks on E-Rupee Anonymity:

  • RBI Governor Shaktikanta Das proposed permanent deletion of transactions to enhance anonymity in e-rupee or CBDC.
  • This measure aims to align digital currency with the anonymity level of paper currency.
  • India is exploring offline transferability of CBDC and introducing programmability features to further financial inclusion goals.
  • Concerns regarding privacy have arisen since CBDC’s late 2022 introduction, with worries about electronic trail unlike cash anonymity.
What is Central Bank Digital Currency (CBDC)?

  • Central Bank Digital Currency (CBDC) is a digital version of traditional paper currency, issued and backed by a central bank.
  • It operates as legal tender and is exchangeable one-to-one with fiat currency.
  • Unlike cryptocurrencies, CBDCs are regulated and have legal tender status, aiming to reduce physical currency handling costs.
  • CBDC transactions occur through blockchain-backed wallets.
  • Objectives include reducing costs associated with physical currency handling and discouraging the use of cryptocurrencies for money transfer.
  • Global trends show countries like Bahamas, Nigeria, and China piloting CBDCs to modernise their financial systems and enhance efficiency.