The Reserve Bank of India sees a central bank digital currency (CBDC) as a double-edged sword that could promote financial inclusion but also undermine commercial banks’ role in the economy.
In a report released Friday, the central bank said a “CBDC can be designed to promote non-anonymity at the individual level, monitor transactions, promote financial inclusion by direct benefit fiscal transfer, pumping central bank ‘helicopter money’ and even direct public consumption to a select basket of goods and services to increase aggregate demand and social welfare.”
Helicopter money refers to distributing large sums of money directly into consumers’ bank accounts to support the economy during times of stress, such as the recent coronavirus crisis. Observers told CoinDesk last year that CBDCs could speed money transfers to consumers but also spur inflation.
