The chapter focuses on the phenomena of digital currencies issued by central banks (CBDC). The approach to the cashless economy, the battle against money laundering and tax evasion, the growing competition of private digital currencies, the enhancement of the monetary policy transmission mechanism, and the technological advancement of the payment sector were identified as important factors contributing to the development of digital currencies by central banks. Availability, anonymity, P2P transfers, interest-bearing features, and other potential restrictions were examined and highlighted as major distinctions between CBDC and private digital currencies and physical currencies. The stability and dependability, safety, speed, and ease of use of the CBDC were highlighted as its primary benefits. The study applied TAM to explore the adoption pattern of digital currency by retail customers through selected banks. The findings explained how different factors are important in determining behavioral intention and CBDC use behavior.
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Enhancing the performance of the payment mechanism is said to be the biggest factor for the CBDC to be issued by all central banks worldwide. In both developed and developing markets, such as India, central banking institutions have conducted surveys for global settlements and listed the efficiency of domestic payments and payment safety as the main factors influencing whether a wholesale or retail digital currency release from a central bank is feasible. The central banking institutions of developing and emerging markets have stated that they have thought about using digital currency issued by a central bank as a possible tool to advance “financial inclusion” in the economy. Additionally, the survey is displayed, to propose that the motivations for working on retail central bank digital currency, which can act as a “complement or substitute to the physical cash,” are typically stronger in developing economies and emerging markets than they are in central banks in advanced economies.
The Apps for smartphones may be one of the leading causes. They have a beneficial effect on several levels and shape the way the average person lives through dependency-based habituation. The benefits of digitization are also being felt by the populace in India, where various macro-level operating ecosystems, such as those for healthcare, provident funds, railways, etc., have gone digital. Even in India’s C class towns, readers may have come across a roadside vegetable or street food vendor scanning a QR code with a small device to confirm payment receipt and receive a brief spoken message. This signifies that, rather than using paper money, she or he accepts payments made via digital means that are directly credited to a bank account. Consequently, a regular person with only a basic understanding of digital literacy and proficiency with smartphones is persuaded that everything occurring in the digital realm makes their life simple and hassle free. In order to avoid paying with credit card companies extra commissions, even major retailers are implementing QR codes. As a result, people are growing used to the advantages and ease those digital technologies offer. Due to their speed, reduced use of paper money, expansion of the tax bracket through the decrease in unrecorded transactions, optimization of operating costs, and other factors, all of these are producing financial benefits at the national level. As gaps in wireless coverage and computer literacy between India and Bharat continue to close, these advantages will only grow. The general public’s latent demand may be greater for new features and upgrades to current ones in order to guarantee greater security, safety, privacy, and transparency.
The background note by the RBI (2022) stated that the purpose of all digital payment tools is to provide consumers a variant for physical cash payments. (Ozili, 2023) inspected the advantages and concerns surrounding the digital Rupee, also known as the e-Rupee or the CBDC in India. It has also been found in the study that people have shown commonality in terms of interest in ‘cryptocurrency ’and interest in ‘CBDC’. The present study also highlighted the potential benefits of CBDC in terms of less dependency on cash and comparatively less transaction cost.
Artificial intelligence has a significant role in financial analysis and financial decisions, as the book discusses the importance of the role of AI in Islamic finance (Irfan, Kadry, Sharif, & Ullah Khan, 2023).