Functions of Money — Current Affairs 2026
Current Affairs Connections
RBI's Digital Rupee (e₹) Pilot Projects Expand Across Cities and Use Cases
Ongoing (2024-2026)The ongoing expansion of the Digital Rupee (e₹) pilot projects by the RBI directly impacts the 'medium of exchange' and 'store of value' functions of money. As a Central Bank Digital Currency (CBDC), e₹ aims to provide a sovereign-backed digital alternative to physical cash, enhancing the efficiency and security of transactions. It could potentially offer a more stable digital store of value compared to volatile cryptocurrencies. From a UPSC perspective, this development highlights the evolution of money in the digital age and its implications for monetary policy, financial inclusion, and the future of payment systems in India.
UPSC Angle: Impact of CBDC on financial inclusion, monetary policy transmission, challenges of implementation, comparison with UPI and private cryptocurrencies, and its role in strengthening the digital economy [VY:ECO-02-08-01].
UPI Transactions Continue Record-Breaking Growth, Surpassing 13 Billion Transactions in a Single Month
Recent (Late 2024 / Early 2025)The phenomenal growth of UPI transactions underscores its dominant role in facilitating the 'medium of exchange' function of money in India. This widespread adoption signifies a significant shift from cash-based transactions to digital payments, reducing transaction costs and enhancing convenience. The sheer volume of transactions reflects the public's trust and reliance on this digital infrastructure for daily economic activities. This trend also impacts the overall money supply measures in India [VY:ECO-01-04-02] by increasing the velocity of money and reducing the demand for physical cash.
UPSC Angle: Role of digital infrastructure in economic growth, financial inclusion, impact on informal economy, challenges of cybersecurity, and its contribution to India's 'less-cash' economy vision. Connects to the efficiency of the banking system in India [VY:ECO-01-04-00].
Inflationary Pressures Persist, Challenging Households' Savings and Investment Decisions
Ongoing (2024-2026)Persistent inflation directly challenges money's 'store of value' function. When the general price level rises, the purchasing power of money declines, meaning a fixed amount of money buys fewer goods and services over time. This erodes the real value of savings held in cash or low-interest bank accounts, prompting individuals to seek alternative assets like real estate, gold, or equity to preserve their wealth. This scenario highlights the critical role of the RBI's monetary policy [VY:ECO-01-05-01] in managing inflation to protect the value of the national currency and maintain public confidence in the financial system.
UPSC Angle: Impact of inflation on different economic agents, effectiveness of monetary policy tools in controlling inflation, implications for financial stability, and the behavioral shift in investment patterns due to eroded purchasing power. Connects directly to inflation and its types [VY:ECO-01-06-01].