Current Affairs 24 August 2022 – IAS Current Affairs

Current Affairs 24 August 2022 focuses on Prelims-Mains perspective. Major events are :

Central Bank Digital Currency

Source: Indian Express
GS II:  Policies and Developmental Studies; GS III:  Science and Technology 

What is discussed under Central Bank Digital Currency?

1. What Is Central Bank Digital Currency (CBDC)?
2. Types of CBDC
3. Benefits and limitations of CBDC
4. Difference between CBDC and cryptocurrency
5. Need for CBDCs in India

Why in News?

The Central Bank Digital Currency (CBDC), the digital rupee of the Reserve Bank of India (RBI) may be introduced in phases beginning with wholesale businesses in the 2022-2023 financial year.

Key Facts

• Finance Minister Nirmala Sitharaman stated that the central bank will introduce the CBDC in the fiscal year 2022–2023 in her statement on the budget on February 1.
• RBI has regularly raised concerns about the use of private cryptocurrencies like Bitcoin, Ether, etc. for money laundering, terror financing, tax evasion, etc.
• In order to set up a CBDC, RBI had proposed amendments in 2021 to the Reserve Bank of India Act, 1934 which aims to enhance the scope of the definition of ‘bank note’ to include currency in digital form.
• Its own CBDC launch has been viewed as a method to balance the benefits and dangers of digital money.
• The government intended to propose a Bill in Parliament that would, with limited exclusions, prohibit any private cryptocurrencies in India.

What Is Central Bank Digital Currency (CBDC)?

• According to the RBI, CBDC is the legal tender issued by a central bank in a digital form.
• It is the same as a fiat currency and is exchangeable one-to-one with the fiat currency.
• Fiat currency:
  • It is a government-issued currency that is not backed by a tangible commodity like gold or silver.
  • It is considered to be a form of accepted legal money for the exchange of goods and services.
  • Banknotes and coins served as the traditional forms of fiat money.
  • Technological advancements have made it possible for governments and financial institutions to replace the physical form of fiat money with a credit-based system in which balances and transactions are recorded digitally.
• The central bank or monetary authority of a country issues and controls CBDCs.
• CBDCs facilitate financial inclusion and make it easier to conduct monetary and fiscal policy.
• CBDCs enable the user to conduct both domestic and cross-border transactions which do not require a third party or a bank.
• They may not provide transaction anonymity, unlike certain cryptocurrencies, because they are a centralised type of money.
• Many nations are looking at the potential impact of CBDCs on their stability, financial systems, and economy.

Types of CBDCs

Wholesale CBDCs

• • Wholesale CBDCs are primarily used by financial institutions.
  • CBDC wholesale transactions resemble keeping reserves at a bank.
  • An institution receives a bank account from the central bank to deposit money into or utilise to complete interbank transactions.
  • Then, central banks can control lending and set interest rates through measures of monetary policy like reserve requirements or interest on reserve balances.

Retail CBDCs

• Retail CBDCs are used by consumers and businesses, much like physical forms of currency.
• It minimises intermediary risk, or the possibility that private digital currency issuers could go out of business and lose the assets of their customers.
• There are two types of retail CBDCs.
  • Token-based retail CBDCs: Accessible with private/public keys.
  • Account-based retail CBDCs: Accessing an account requires a digital ID.

Central Bank Digital Currencies at a Glance

• More than 80 central banks are researching digital currencies.
• The first digital money to be issued by a significant economy was the digital RMB from China.
• Other central banks that issued CBCD as of July 2022 are:
  • The Central Bank of the Bahamas (Sand Dollar)
  • The Eastern Caribbean Central Bank (DCash)
  • The Central Bank of Nigeria (e-Naira)
  • The Bank of Jamaica (JamDex)
• Korea, Sweden, Jamaica, and Ukraine are some of the countries to have begun testing its digital currency and many more may soon follow.

Benefits of Central Bank Digital Currency

• Reduces dependency on cash
• Higher seigniorage due to lower transaction costs

  

• Reduces settlement risk
• More robust, efficient, trusted, regulated and legal tender-based payments option
• Provides businesses and consumers with privacy, transferability, convenience, accessibility, and financial security
• Decreases the maintenance a complex financial system requires
• Reduces cross-border transaction costs
• Provides those who currently use alternative money transfer methods with lower-cost options
• Prevents illicit activity

Limitations of CBDC

• Potential cybersecurity threat
• Lack of digital literacy among the population
• Issues with regulation, tracking investment and purchase, taxing individuals, etc.
• Threat to privacy

CBDCs vs. Cryptocurrencies

Need for CBDCs in India

• India has the chance to establish the supremacy of the Digital Rupee as a superior currency for commerce with its strategic partners, therefore reducing its reliance on the dollar, thanks to the Digital Rupee.
• As the central bank can monitor each unit of the digital currency, it would also assist India in combating malpractices such as tax evasion, funding of terrorism, money laundering, etc.
• RBI will have more power under CBDC to oversee monetary policy.
• Instead of depending on commercial banks to make modifications as they see appropriate, these consequences of monetary policy can be promptly reflected.
• Additionally, it will enable RBI to control credit flow and transactions across the Indian economy, quickly catching frauds and scams and safeguarding depositors’ funds.

Tomato Flu

Source: Indian Express
GS II:  Policies and Developmental Studies

What is discussed under Tomato Flu?

1. What is Tomato Flu, symptoms and treatment?
2. Preventive measures for Tomato Flue

Why in News?

• The new virus ‘Tomato flu’ was detected in India according to a report in the Lancet Respiratory Journal.
• In India, 82 children have been infected with the “tomato flu” to yet.
• It’s significant to highlight that all infected kids are under the age of five.

What is Tomato Flu?

• The infection is named ‘tomato flu’ because of the red and painful blisters that appear throughout and grow gradually to the size of a tomato.
• The disease, which seems to be a variant of Hand, Foot and Mouth Disease (HFMD), occurs mainly in children under 10 years of age, but it can occur in adults too.
• It is a self-limiting disease, as the signs and symptoms resolve after a few days.
• It is caused by Coxsackievirus A 16 belongs to the group of enteroviruses.

Symptoms

• Skin irritation: It is one of the most common symptoms of a Tomato Flu-infected person.
• Decolouration: Legs and hands get discoloured and slightly unidentifiable.

  

• Fatigue and tiredness: While fatigue can be common for people who travel a lot, fatigue can be a health risk.
• Abdominal cramps, nausea, vomiting, or diarrhoea: While these symptoms are also common, they can affect your overall health.
• Coughing, fever, sneezing or runny nose: These symptoms are quite common in coronavirus as well.
• Joint pain and body ache: A virus-infected person would have difficulty moving smoothly.

Transmission

• This viral infection spread through close contact.
• Since viral infections are widespread in children this age and transmission is most probable through close contact, children are more likely to be exposed to tomato flu.
• Young children can acquire this virus by touching dirty surfaces, using diapers, and putting objects directly in their mouths.
• Utensils, clothes and other items used by the infected persons must be sanitised to prevent the flu from spreading.
• Given the similarity to hand, foot, and mouth illness, the transmission of might have significant consequences by spreading to adults if the outbreak in children is not contained and stopped.

Treatment

• The known treatment for Tomato flu seems similar to the treatment of Chikungunya and Dengue.
• Patients are advised to isolate rest, stay hydrated and drink plenty of fluids.
• Use a hot water sponge for the relief of irritation and rashes.
• Supportive therapy of paracetamol for fever and body ache and other symptomatic treatments are required.
• Currently, no antiviral drugs or vaccines are available for treatment or prevention.

Preventive Measures

• Children must be educated about the signs and symptoms and side effects of the illness.
• Monitoring for serious outcomes and sequelae to better understand the need for potential treatments.
• Proper screening by the health authorities.
• Increased surveillance.

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