Development and Implications of Digital Currency

This chapter highlights the swift expansion of digital payments, with China leading in cumulative transaction value and India’s Unified Payment Interface (UPI) changing the nation's payment landscape. Central Bank Digital Currencies (CBDCs) have appeared as a global trend, with different issuance models and numerous countries vigorously exploring or launching their CBDCs. Additionally, this chapter explores the multifaceted effects of digital currencies. These digital currencies aim to improve financial system efficiency and secure transactions. The impact on financial stability is a crucial consideration, as CBDCs offer central banks new tools for managing monetary policy and systemic risk, compelling careful regulation. Digital currency, encompassing CBDCs and cryptocurrencies, also holds promise for financial inclusion by providing accessible financial services and addressing barriers to both demand and supply. Furthermore, digital currency simplifies international trade, benefiting small and medium-sized enterprises and reducing currency exchange risks.