The Reserve Bank of India offered its assessment of CBDCs as part of its report on currency and finance issued on Sunday.
Per the report, the RBI indicated that some countries are exploring the creation of their own sovereign national digital currency.
According to the central bank’s report, CBDCs can help to promote financial inclusion and transactional transparency. The RBI also noted that national digital currencies could be useful as an instrument of monetary transmission by helping to engineer public consumption toward specific categories of products and services.
Detailing the advantages of CBDCs, the RBI stated that digital counterparts to sovereign fiat currency could be used by central banks to pump “helicopter money.”
In its analysis, the RBI also expressed concerns about the potential negative impacts of CBDCs on the legacy financial system, adding:
“CBDC is, however, not an unmixed blessing — it poses a risk of disintermediation of the banking system, more so if the commercial banking system is perceived to be fragile.”
As reported by Cointelegraph, for countries with particular credit markets, the RBI claimed that CBDCs could threaten the primacy of commercial banks as the main channel for the transmission of monetary policy.
