Central bank digital currency (CBDC) is a type of virtual currency sanctioned by the government of a particular country. Unlike regular money, CBDC is not physically present with the owner. It mostly works in conjunction with neobanks.

The concept of CBDCs, or national digital currencies has the potential to make the world a small place. While some governments have already implemented the idea, others believe there's still some research to do before making the decision or have just dismissed the concept altogether.

Lithuania has emerged as the first country to trial CBDC and China is expected to follow because of its strong inclination towards the same. Meanwhile, Germany is completely against the idea as other countries around the world are left deliberating.

In a survey of 66 central banks, including the RBI, conducted by the Bank for International Settlements (BIS) in 2018 and late 2019, 80% central banks claimed that they were actively engaged in research, experiments, or development work related to CBDC. The survey shows that 40% of central banks have progressed from research to experiments, whereas 10% have already developed pilot projects. This indicates that authorities of today are in no doubt of a digital future.

Benefits of CBDC
It is contactless, which is very well suited for a post covid world.It is more convenient to use and amounts to precise accuracy. The trouble of exchanging physical coins and notes is put out of the picture.It can be tracked better and thus, can reduce cases of money laundering and such monetary frauds.It can, in a farfetched future, streamline the global currency as it can connect people across borders, leading to an unimaginable finance angle to globalisation.Apprehensions regarding CBDC
It is more vulnerable to cybercrime. More so since it is a novel concept that may not be fully secure from the get-go.It could develop security issues for the citizens as one's use of money contains frightening amounts of information about their behaviour, which the government can now scrutinise at every second of the day. It is not feasible for countries all across the world, or even for all the citizens in a single country. India's digital divide stands as an affirmation of the fact.Developing the infrastructure could be considered an untimely investment as the post-covid economy turns to shambles, across the world.CBDC in India
The National Institute for Smart Governance (NISG), a non-profit company incorporated by the Indian government that provides e-governance consulting services to central and state governments, has published a draft document on the "National Strategy on Blockchain" which strongly recommends the Reserve Bank of India, the country's central bank, to develop a SBDC. The draft refers to it as Central Bank Digital INR (CBDR) or a state-backed digital Rupee. The NISG has predicted that this marks a "transitory step to the ultimate eventuality of a fully digitalised currency."

However, no such known step is taken by the government, as of now.