CBDC is divided into two categories: general purpose or retail (CBDC-R) and wholesale (CBDC-W) (CBDC-W).
Retail CBDC or CBDC-R can be used by anyone in the private sector, including non-financial consumers and businesses. CBDC-R is a type of electronic cash that is primarily intended for retail use. With a diverse range of payment products ranging from RTGS, NEFT, to UPI, and an exponential increase in digital transactions, India already has a solid payment system in place. CBDC-R will be a secure central bank instrument with direct payment and settlement access to central bank funds. It is also claimed that it can help a country's retail payment system. Some examples of top retail CBDC projects include, Nigeria, Bahamas, Mainland China, Jamaica, Eastern Caribbean, Ukraine, Uruguay, Thailand, Sweden, Korea (the Republic of).
CBDC-W or Wholesale CBDCs, on the other hand, are only available to financial institutions. CBDC-W has the potential to improve the efficiency of interbank payments and securities settlement. It has the potential to improve the efficiency and security of financial transaction settlement systems used by banks in the G-Sec Segment, Inter-bank market, and capital market in terms of operational costs, collateral use, and liquidity management. Examples of top wholesale CBDC project include, Thailand, Hong Kong, Singapore, Canada, France, South Africa, United Arab Emirates, Japan, Saudi Arabia, Switzerland.
*The difference between Wholesale and Retail CBDC:
Retail CBDCs are popular among central banks in emerging economies because they provide incentives to take the lead in the rapidly developing fintech industry and reduce cash printing and handling costs, paving the way for a cashless society.
Though both Wholesale CBDC and Retail CBDC are digital currencies issued by the central bank, the latter is used in the interbank system to effect a cross-border payment and thus has a variety of use cases.
Read more at:
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