By Andrei Kozliar, expert in digital finance and financial infrastructure
In global finance, the term “Central Bank Digital Currency” (CBDC) is often mistaken for a technological upgrade of cash. In reality, CBDCs represent something much more consequential. They introduce a new architecture of money – where the state controls not only the issuance of currency, but also the data flows, settlement protocols and the interoperability of financial systems.
More than Money: CBDC as Architecture
Unlike banknotes or commercial bank deposits, a CBDC is a direct digital liability of the central bank. It retains the same face value as the national currency, but can be transferred instantly, settled without intermediaries and embedded into programmable financial logic.
In India, the Digital Rupee is being introduced as a complement to physical currency. It functions through digital wallets issued under central bank oversight and can be used for everyday payments in retail and wholesale transactions. The goal is not to eliminate cash, but to modernize the foundation of the monetary system – to make it faster, more transparent and more resilient.
This means CBDCs should not be viewed merely as new forms of currency. They are, in effect, new forms of financial infrastructure.
Four Emerging Models of CBDC Design
Around the world, governments are pursuing distinct strategic approaches to digital currency:
China focuses on international influence. The e-CNY is being tested in cross-border environments and is seen as a way to reduce dependence on dollar-based payment networks.
The European Union emphasizes privacy, standards and interoperability. The proposed digital euro is designed to function within a regulated environment that prioritizes consumer protection and unified settlement rules.
India is building on an already strong foundation of digital identity and real-time payments. The Digital Rupee is being tested across retail and wholesale use cases, with an emphasis on scalability and accessibility.
Brazil is developing its own CBDC model to strengthen financial inclusion and reduce reliance on global intermediaries.
Though different in design, these models compete in the same arena: the architecture of financial connectivity.
The Strategic Question: Who Controls the Protocols?
As CBDCs evolve, the core competition is no longer about currency dominance. It is about who defines the standards – the technical rules that govern how transactions are validated, recorded and transmitted across digital networks.
Settlement protocols determine:
- which countries can transact directly with one another;
- how fast capital moves across borders;
- how transparent the state’s control over flows can be.
Control over payment rails has always been a foundation of geopolitical power. CBDCs make this explicit.
In this sense, the competition over digital currencies is a competition over economic sovereignty and digital influence.
India’s Role in the Emerging Multipolar System
India is at a unique advantage. The country has already built two critical layers of national digital infrastructure:
- Aadhaar – a universal digital identity system.
- UPI – one of the world’s most efficient real-time payment networks.
The Digital Rupee can integrate with these systems, establishing a seamless digital financial environment at a national scale.
India is also testing CBDC use cases in:
- inter-bank settlement,
- retail payments,
- programmable transfers (e.g., conditional subsidies and supply chain financing).
This positions India not only as a CBDC participant, but as a potential standards-setter for emerging markets across Asia and Africa, where digital payments are scaling rapidly and Western settlement systems have lower penetration.
From Digital Banking to Digital Infrastructure
As CBDCs mature, financial institutions will have to adapt to a new operational reality:
- Banks will no longer simply process payments – they will integrate directly into national digital currency platforms.
- Fintechs will evolve from building consumer apps to building service layers on top of programmable money.
- Regulators will become architects of system interoperability, rather than just enforcers.
The competitive advantage will shift from customer acquisition to infrastructure integration, data governance and cross-system compatibility.
Conclusion: The Future Will Be Built on Standards, Not Symbols
The future of money will be shaped not by which currency circulates most widely, but by which systems interoperate most effectively.
CBDCs signal the beginning of a multipolar monetary world, where the dominance of any one financial center is reduced, and influence is exercised through standards, code and settlement frameworks.
In this environment, the leading countries will be those that can align:
- national digital identity,
- real-time payment layers,
- programmable monetary infrastructure,
- and coherent regulatory design.
India is positioned to become one of them.
The race is no longer about issuing digital money. The race is about defining the architecture of trust and exchange in the global digital economy.
