RBI Can Launch India’s 1st Ever Digital Currency On This Date: Digital Version Of INR?
RBI may launch India’s digital currency in the fiscal year April 2022 to March 2023.
P. Vasudevan, a senior central bank officer, had made the revelation at the SBI’s Banking and Economic Conclave.
He is the RBI’s chief general manager at the Department of Payment & Settlement.
What Is A ‘Digital’ Currency?
Central bank digital currencies, or CBDCs are digital or virtual currencies, essentially the digital version of fiat currencies which in this case is the INR.
It could potentially be widely used by households and businesses to make payments and store value.
Another utility is that it can help governments airdrop money directly into the accounts of the deprived sections of the population during emergencies such as the pandemic induced lockdowns last year.
However, he has cautioned that CBDC cannot be assumed to become a habit in the near future since the various issues and nuances related to it are still being studied.
But he did say that it could have a useful purpose depending on its implementation and therefore launch should not be made hastily.
Studying The Ins And Outs
Among the various aspects of CBDC the RBI is looking at include whether it should target the wholesale or retail segment, the validation mechanism and also other issues regarding distribution channels.
It is also evaluating whether intermediaries can be bypassed altogether and if the technology should be decentralized or semi-centralised.
China Already Ahead?
Presently, China is poised to become the global leader to launch a digital currency.
It has already distributed 10 million digital yuan to Shenzhen citizens a year ago.
It has also used its CBDC to make 62 billion yuan ($9.7 billion) of transactions as of October end, according to an official from the People’s Bank of China.
Bill During Parl Winter Session?
The Indian government may table a crypto regulation bill in the upcoming winter session of the parliament, scheduled to start from Nov. 29 and end around Dec. 23.
The RBI has raised concerns several times over the posing macro-economic and financial stability risks posed by cryptocurrencies.
In a way, it would complement the UPI (unified payments interface) which is already used in place of cash in several cases.
The Case For CBDCs
It could also go a long way towards improving financial inclusion where anyone can open a secured wallet to store cryptocurrencies.
The concept however would definitely require safeguards such as the one in China which forbids new players, but existing commercial banks are the main drivers of the space.