CBDCs and Digital Payments: The Future of Finance or a Threat to Freedom

India is leading the way in digitalization, particularly in the areas of digital payments and public digital infrastructure. Central Bank Digital Currencies (CBDCs) are seen as the future of global currencies, and countries are encouraged to work towards their development and implementation. At the same time, traditional paper currency is expected to remain as a backup in case of technological failures or crises.

India has already achieved remarkable progress in digital payments, processing over 10 billion transactions per month through its Unified Payments Interface (UPI) system. CBDCs are regarded as essential tools to enhance financial inclusion, promote innovation, and improve economic efficiency.

However, concerns have been raised about emerging forms of digital currencies, such as stablecoins and cryptocurrencies. These technologies pose potential threats to domestic and global financial stability, risk undermining central banks' control over monetary systems, and may facilitate illegal activities like money laundering and terrorism financing.

While acknowledging the innovations brought by these technologies, caution is advised. A thorough understanding of the risks and consequences is considered crucial before granting legitimacy to such financial products.