RBI Can Launch Digital Version Of Indian Currency Notes: How Will It Work?
Though many private digital currencies, virtual currencies and cryptocurrencies have gained popularity in recent years, Indian authorities have continued to be sceptical about the same. However on Monday, RBI said that it is open to exploring the possibility of a digital version of fiat currency.
Reasons Behind The Government’s Apprehension:-
RBI in its booklet, namely, “Payment Systems in India — Journey in the Second Decade of the Millenium” said that it is the apprehension of associated risks, how to operationalize the currency and if at all there is a need for a digital version of currency is what has kept the Indian government sceptic about the same, despite the rise in popularity.
Digital money is in the form of electronic currency, which can be converted or exchanged at par with similarly denominated cash and traditional central bank deposits. Innovations are changing the payments space rapidly.
Central banks are examining if they could leverage technology and issue fiat money in digital form. A Framework to capture business as well as location details of commercial bank branches, ATMs and banking correspondents across the country has already been established by RBI.
The Booklets :-
The booklet revealed that a similar framework has been envisaged to capture and maintain information about point of sales terminals and other payment system touchpoints. Right from 2010 to end of 2020, the booklet covers the journey of the Payment and Settlement Systems in India.
The Reserve Bank of India had earlier come out with booklets on payment systems in 1998 and 2008.
RBI said about the third booklet of the series that it will cater to those who intend to know more about payment system developments in the country.
RBI Governor says that the booklet describes how carefully RBI has brought the evolution of digital payments.
In order to realise the vision of India on payment systems, RBI is not unaware of the challenges and is mindful of the same. To enable across country as well as cross-border digital payments which are safe, quick and affordable, RBI is seeking to create a payment ecosystem.
Lack of familiarity with new, alternate payment methods, connectivity issues, inadequate acceptance infrastructure and delay in getting complaints resolved and security and privacy concerns are few of the factors inhibiting the digital push.
Systems like consumer awareness programmes, ombudsman schemes have been put in place to address issues like these. RBI while talking about the digital payments, said that it has started to expand beyond boundaries.
Booklet said that India is being perceived as a leader in payment systems, and that is evident from the implementation of successful Indian practices in developed countries of Europe and the U.S.