Abstract

Digital currencies have emerged as a transformative force in the global financial ecosystem reshaping payment systems monetary policy and financial inclusion. With the rise of cryptocurrencies such as Bitcoin and Ethereum governments and central banks worldwide are exploring Central Bank Digital Currencies (CBDCs) as regulated alternatives. In India the Reserve Bank of India (RBI) has initiated pilot projects for the Digital Rupee signaling a paradigm shift in the country’s financial infrastructure. This paper examines the implications of digital currencies and CBDCs for the Indian economy. It analyzes potential benefits including enhanced efficiency reduced costs financial inclusion and transparency as well as challenges such as cybersecurity risks regulatory complexities and monetary policy adjustments. Case studies from China’s e-CNY Nigeria’s eNaira and the European Central Bank’s digital euro initiatives provide comparative insights. The findings suggest that CBDCs if designed inc