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Inter-departmental group to study launching of fiat digital currency
April 11 , 2018
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- The Reserve Bank of India (RBI) has constituted an inter-departmental group to study and provide guidance on feasibility to introduce fiat digital currency backed by it.
- Fiat currency is currency that a government has declared to be legal tender which is different from cryptocurrency which is not legal tender and not backed by government.
- The Bank of England was one of the first to initiate a global discussion on prospects for introduction on Fiat digital currency.
- In November 2017, the central bank of Uruguay had announced to begin test to issue digital Uruguayan pesos.
- Fiat Digital Currency (or Central bank digital currency) is the digital form of fiat money which is currency established as money by government regulation or law.
- As opposed to private digital tokens, fiat digital currency will be issued by central bank.
- Fiat Digital Currency will constitute liability of central bank, and will be in circulation in addition to widely used paper and metallic currency.
- They will be based on blockchain technology which is backbone of unregulated virtual currencies like bitcoin.
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