Benefits and Concerns of Programmable CBDC

The programmability of a CBDC offers several benefits, including easier implementation of monetary policy adjustments and controlling the velocity of spending. By setting rules and timers for the digital money, the RBI can influence how and when it is spent. However, concerns surrounding fungibility of money arise when programmability limits the use and lifespan of the currency. The government's ability to track transactions and dictate spending decisions also raises privacy and trust issues. While the RBI is exploring the potential of a programmable CBDC, some central banks, like the Bank of England, have chosen not to pursue government-initiated programmable functions.