Finance Minister Nirmala Sitharaman announced the introduction of Digital Rupee by the Reserve Bank of India in the Union Budget 2022. The Digital Rupee or central bank digital currency will be introduced using blockchain, the Finance Minister said while presenting the budget.
Earlier, the Reserve Bank of India (RBI) had received approval in October, 2021 to amend the Reserve Bank of India Act, 1934 to expand the scope of the definition of ‘bank note’ to include currency in digital form. The Center had earlier said that CBDCs have the potential to provide significant benefits such as reducing dependence on liquidity.
Minister of State on this Finance Ministry, Pankaj Chaudhary replied in writing. Central Bank Digital Currency (CBDC) introduced by the Central Bank A proposal has been received from the Reserve Bank of India (RBI) in October, 2021. RBI is examining the use cases and working out a phased implementation strategy to launch the CBDC without any disruption. ,
On a question related to the purpose of introducing digital currency and whether any assessment has been done on its impacts, the minister said that the move will have significant benefits.
“The introduction of a CBDC has the potential to provide significant benefits, such as less dependence on cash, higher isolation due to lower transaction costs, lower settlement risk. The introduction of CBDCs will result in more robust, efficient, reliable, regulated and fiat-based payments. Alternatives are likely to be made. There are also associated risks which need to be carefully evaluated against the potential benefits,” Choudhary said in response.
“Unregulated cryptocurrencies can destabilize the macro-economy and create large speculative bubbles. To that extent, RBI is right,” ET quoted the source as saying in its report.
The government’s reply comes amid reports that the RBI’s central bank digital currency is likely to be included in the government’s upcoming bill to regulate cryptocurrencies during the winter session of Parliament. A report in the Economic Times quoted government sources as saying that the bill was a response to the RBI’s concerns about macro-economic stability. The official added that “the government’s response is not to ban cryptocurrencies, but to provide cryptocurrencies through the RBI.”
The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, notified in the Lok Sabha bulletin a few days ago, seeks to ban all private cryptocurrencies. On top of this, it also wants to introduce a digital currency of its own backed by the Reserve Bank of India. It also proposed “creating a facilitating framework for the creation of an official digital currency to be issued by the Reserve Bank of India”. In addition, it sought to allow “certain exceptions to promote the cryptocurrency and the underlying technology of its use…” the bulletin said.
In August this year, RBI Governor Shaktikanta Das told CNBC that trials for the launch of the official digital currency are likely to begin in December. “I think by the end of the year, we should be able – we will be in a position, probably – to start our first test,” he told the news portal during an interview.
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