Mentor’s comment-
- https://indianexpress.com/
article/opinion/editorials/ budget-rbi-digital-rupee- 7755577/ - In the intro, mention the announcement about the proposed introduction of digital currency to be issued by the RBI.
- In the body, explain digital currency and how it is different from conventional currencies. In the benefits mention financial inclusion, lower costs for financial transactions, , the advantages of an alternate payments system, the creation of another instrument in the monetary policy arsenal of central banks, the likely adverse impacts on corruption and money laundering etc. In the concerns mention implications for banking systems if the CBDC accounts are interest-bearing, question of anonymity etc.
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Conclude by mentioning that the central bank must proceed cautiously, remaining mindful of the various issues, the design considerations and the implications.
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Priyanka
Decent attempt, intro is good. You can also mention some global examples where it has been issued(Bahamas) or is in consideration.
In next part, just mention the advantage and disadvantages- no need to compare with conventional currency as your subheading suggests.
Advantages mentioned are good, you can add some points like financial inclusion, creation of alternate payment systems which might reduce cost of financial transactions especially in cross-border transactions.
Disadvantages are fine too, however since these will be interest-bearing you can mention the adverse impact on banks when large scale withdrawal takes place. Other points regarding privacy etc are fine.
Conclusion is good, keep practicing. 🙂
4.5/10
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Alka
Decent attempt, intro is fine.. You can also mention some examples at global level where it is being considered for use Or the budget speech announcement can be mentioned to link it with current affairs.
Advantages and disadvantages part are fine, in advantages you can add a point regarding chances of reduction in money-laundering and corruption; in disadvantages you can mention its adverse impact on commercial banks in case of large scale withdrawals due to its interest-bearing nature.
Other points are good.
Conclusion is fine, keep practicing. 🙂
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Karun
Introduction can be better, it seems what you are talking about is virtual currency. There is difference between CBDC and virtual UPI based payments etc.
CBDC will be a fiat currency having legal tender backed by RBI itself, wheres UPI/wallet transactions take place on the basis of underlying cash asset.
You can mention some examples at global level where it is being considered for use Or the budget speech announcement can be mentioned to link it with current affairs.
Benefits part is fine, creation of alternate payment system and another instrument in the monetary policy arsenal of central banks can be talked about too. Concerns are good, adverse impact on commercial banks in case of large scale withdrawals due to its interest-bearing nature can be mentioned too.
Conclusion is fine.
Keep practicing. 🙂
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Anoop
Good attempt, your understanding of the topic is good, structure of the answer is also fine.
Intro first para is fine, in 2nd para, you can explain CBDC a bit better-fiat currency; digital Rupee in itself will be the underlying payment mode that can be used for digital payments in lieu of currency/cash unlike other UPI/wallet transactions which are backed by underlying currency.
Advantages mentioned are good.
Money laundering and corruption is expected to reduce in digital form, which you have mentioned in disadvantages…cyber risks are more in digital form. Adverse impact on commercial banks in case of large scale withdrawals due to its interest-bearing nature can also be mentioned in disadvantages.
Conclusion is good, keep practicing. 🙂